Economics Prelims cum Mains

KALIA: How Odisha new scheme supports farm community with payment

Details :

The news

  • The Odisha government has come up with a support scheme called KALIA (Krushak Assistance for Livelihood and Income Augmentation) for farmers.

 

Background

  • Ahead of Lok Sabha elections, political parties across the country are coming with different ideas for farmers like loan waivers, interest free loans, universal basic income, and increase in MSP, etc.
  • In this scenario, the Odisha government has come up with a support scheme with primary targets being small farmers, cultivators and landless agricultural labourers.

 

Highlights of the news

  • KALIA (Krushak Assistance for Livelihood and Income Augmentation) was launched in December. 2019 by the Odisha government.
  • It recently completed its first phase of registration.
  • Feature of the scheme
    • Financial assistance of Rs 10,180 crore will be provided to farmers over three years until 2020-21.
    • The scheme will include every category of farmers from big farmers to landless cultivators.
    • All farmers will be provided Rs 10,000 per family as assistance for cultivation.
    • Each family will get Rs 5,000 separately in the kharif and rabi seasons, for five cropping seasons between 2018-19 and 2021-22.
    • The scheme targets 10 lakh landless households, and specifically SC and ST families.
    • They will be supported with a unit cost of Rs 12,500 for activities like goat rearing, mushroom cultivation, beekeeping, poultry farming and fishery.
    • For these activities, the beneficiary is encouraged to choose an activity with which he is familiar because these trades require some skill and network.
    • The idea is to identify an existing capacity and build on it.
    • This is also an area-specific scheme, where an input support for a particular trade will be provided if it prevalent in the entire locality, so that the produce can be aggregated. For example-mushroom cultivation.
    • The scheme will also assist with sustenance of Rs 10,000 per household per year to the elderly, sick and differently-abled population who are unable to take up cultivation.
    • The KALIA scheme also includes a life insurance cover of Rs 2 lakh and additional personal accident coverage of the same amount for 57 lakh households.
    • Crop loans up to Rs 50,000 are interest-free.

 

  • Significance of the scheme
    • The scheme will encourage cultivation and associated activities, which will help in improving agriculture production in the state.
    • It is expected to benefit 92% of the cultivators in the state. It is not only for certain targets farmers leaving out others. Whether one owes one acre or five acres, one gets the same financial assistance.
    • It is expected that it will greatly benefit sharecroppers and cultivators, most of who own little or no land.
    • There’s an effort to add skilling component along with assistance.
    • The scheme also provides social security to elderly, sick and differently abled.
    • It also provisions for Insurance, which will increase the social security net in the state.
    • This will help in improving income of farmers and getting them out of the vicious cycle of low risk taking investment.
    • It is based on the principles of partial universal basic income.

 

Comparison between KALIA and Loan waiver

  • Loan waiver work only for a few farmers but KALIA’s main targets is rural activities as a whole.
  • Loan waiver only benefits those who have taken loan from formal banking institutions but it leaves out the most poor and exploited farmers who take money from local lenders whereas KALIA will support farming on a small scale, sharecropping, fishing, animal herding, which are not covered under bank loans, but are caught in debt traps set up by local moneylenders.
  • A farm loan waiver will reduce credit available to farmers in the long term, while income support through Kalia can be used to make a repayment or at least activate a bank account which can then receive a loan.
  • Loan waivers increases bank burden by piling up NPAs whereas schemes like KALIA will decrease the NPA burden of banks, as farmers will be able to pay back their debt.
  • Unlike loan waiver, KALIA scheme is also having other benefits, like insurance cover, interest free loan, benefits to those who even don’t have land and also to vulnerable sections.
  • There’s freedom of choice for the farmers to spend the income support amount in any activity, whereas through loan waiver, interest free loan, etc. it is not possible as the amount has only to be spent in agriculture.
  • Unlike loan waivers, the KALIA scheme provides for registration under the scheme with their choice of agriculture and allied activity.
  • With this a targeted approach to improve skills of farmers, varied production could be taken.

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