PM-KISAN and the Adoption of Modern Agricultural Technologies

The Pradhan Mantri Kisan Samman Nidhi scheme aims to provide income support to farmers for easing their liquidity needs to facilitate timely access to inputs. This study, based on 1,406 farmers of Uttar Pradesh, uses a binary choice model to examine the targeting accuracy and correlates of the spending pattern of farmers. Triple difference with matching estimators is used to identify the differential impact of the scheme on the Krishi Vigyan Kendra beneficiaries. Results show that the scheme reached one-third farmers in the first three months of its implementation, and has significantly helped those who are relatively more dependent on agriculture and have poor access to credit. Moreover, the scheme has significantly stimulated the Krishi Vigyan Kendra's impact on the adoption of modern cultivars.

This study is a part of the Indian Council of Agricultural Research–International Food Policy Research Institute project “Assessing the Impact of Krishi Vigyan Kendra in India.” It has also been published as an IFPRI Discussion Paper in January 2020.

We acknowledge ICAR for the financial support and the Consortium on International Agricultural Research Centers’ research programme on policies, Institutions, and Markets (PIM) led by IFPRI.

Adoption of modern technologies is one of the most promising strategies to increase farm incomes. Among the constraints in technology adoption, the most prominent ones are the lack of information and credit (Varshney et al 2019). Banerjee et al (2017) also show that access to formal credit significantly increased the investment in existing small businesses. In India, more than half of the farming households do not have access to formal credit. In such a situation, the introduction of a cash transfer scheme, namely the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) in December 2018, to ease liquidity constraints of farmers for procuring inputs, is quite salient. While the scheme is pitched as a general cash transfer scheme for the farmers, its role in the adoption of modern technologies remains an important research question that this paper addresses.

In general, the effects of cash transfers are well analysed on outcomes such as household consumption, educational attainment, and health (Gertler 2004; Fiszbein and Schady 2009; Adato and Bassett 2009). However, the impacts of cash transfers on the agriculture sector are comparatively less studied, including, importantly, its impact on technology adoption (examples include Sadoulet et al 2001; Gertler et al 2012; Haushofer and Shapiro 2016; Tirivayi et al 2016). In this context, PM-Kisan presents a natural experiment to assess the effects of cash transfers. For any intervention to provide long-term impacts, there must be some investments in productive activity. In this context, Gertler et al (2012) and Handa et al (2018) show that a small monthly cash transfers may lead to increased consumption, even after beneficiaries left the programme. Haushofer and Shapiro (2016) show that a large unconditional transfer to poor households may increase future earnings by encouraging investments in livestock. Sadoulet et al (2001) show the multiplier effect of cash transfers.¹ All these studies point towards a productive investment in the short run leading to sustained long-term impacts. How does PM-KISAN fare in this context?