Land-Holding Inequality and Responses to Government Interventions

by Preetha Joseph

We conducted the 26th Consumer Pyramids Research Seminar on January 19th 2023

Abhishek Shaw and Sawan Rathi (IIM Ahmedabad) presented their paper on the impact of agricultural cash transfers, on farmers in Telangana. The paper is co-authored by Anindya S Chakrabarti (IIM Ahmedabdad). The event was attended by around 70 participants. The audience contributed several questions and comments.

The study investigates the impact of the Rythu Bandhu scheme implemented in 2018 in Telangana. The scheme entailed a cash transfer of Rs. 4000 per acre of agricultural land for farmers, twice a year. This was preceded by the Land Records Updation Programme (LRUP), whereby the government carried out digitisation of land records and provision of land passbooks to farmers.

The researchers aimed to study whether households at different income levels respond differently to government interventions, using the Rythu Bandhu and LRUP as natural experiments. They used CPHS data on household consumption, borrowing, and income from November 2017 to April 2019. They employed a Difference-in-Differences strategy to compare expenditure and borrowing patterns of households in Telangana districts, and of districts in bordering states that did not receive the intervention. Using household groupings available in CPHS, they also ventured to identify whether the outcomes varied across households of agricultural labourers, small/marginal farmers, and organized farmers.

The study finds that overall consumption expenditure of farming households in Telangana increased by 12.9 percent relative to households in neighbouring states, following the intervention. The increase was predominantly observed in food, energy, and health expenses. The researchers also observed an increase in formal borrowing, which they attribute to the access of collateral through the LRUP land passbooks. They highlight that the impact of the intervention did not have any impact on landless agricultural labourers. They also presented policy suggestions, in light of their observation that responses to such schemes can be highly varied across occupation and income groups.

Dr Phanindra Goyari (University of Hyderabad) served as discussant. He commended the authors on the detailed nature of their work and its significance in policy impact studies. Goyari suggested further investigation into the role played by different sources of household income and member-level occupation data, in the trends observed. Using additional consumption categories such as education and skill development was also recommended. He also discussed the scope for future work, in studying the impact of the PM Kisan scheme and other similar policy on different social groups, across other states.

The authors responded to the discussion comments and answered all questions from the audience before the session came to a close.

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