Kisan scheme more a sentiment booster than a demand driver for tractors: M&M’s Pawan Goenka

The Pradhan Mantri Kisan Samman Nidhi (PM Kisan) scheme in Union Budget 2019, which gives monetary support to small farmers, may not have a strong bearing on the uptick in tractor and agri-equipment demand, a top official at Mahindra & Mahindra (M&M) said.

The scheme, however, will likely uplift farmer sentiments, which has been subdued since the past few months, its Managing Director Pawan Goenka said.

“The PM Kisan scheme does not directly affect sale of agricultural equipment for farmers having under two hectares of land. This is simply because these are not farmers who buy agri-equipments. But for these farmers, Rs 6,000 is about 8-10 percent of their annual income, so it does make a difference for them,” Goenka said.

The Rs 6,000 a year, which will be paid in three equal instalments directly by the government, is aimed to take care of farm-related expenses such as buying of seeds, agri-equipments and other such expenses.

“This money will probably go into buying more or better agri inputs. Or, can go towards buying some necessities. So, overall sentiments will improve and have a positive psychological impact, especially now that farm sentiments are somewhat subdued,” he added.

Data for 2015-16 Agriculture Census reveals that in a total of 146 million operational land holdings in the country, the highest number of operational holders belonged to Uttar Pradesh (23.82 million) followed by Bihar (16.41 million), Maharashtra (14.71 million), Madhya Pradesh (10.00 million), and Karnataka (8.68 million).

The average size of operational holding has declined to 1.08 hectares in 2015-16 as compared to 1.15 hectares in 2010-11.

“This income support will be transferred directly to the bank accounts of beneficiary farmers. This programme will be funded entirely by the government. About 12 crore farmer families will stand to get benefit from this scheme, which will be brought into effect from December 1, 2018 itself. The first instalment of Rs 2,000 will be paid in a short while. The government will absorb Rs 75,000 crore burden,” Finance Minister Piyush Goyal said.

January tractor sales for M&M grew by just a percent to 20,948 units as against 20,822 units in the domestic market. In December, tractor sales dipped by two percent year-on-year to 16,855 units.