Cash, Credit and Crops: Assessing the Impact of PM-KISAN on Farm Household Financial Resilience

Abstract

This study assesses the impact of India's Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme on  farm  household  financial  resilience, conceptualized across three pillars: consumption smoothing,  indebtedness  management,  and productive  investment.  Utilizing  nationally representative secondary data from the National Statistical  Office's  Situation  Assessment  of Agricultural Households (2021) and NABARD's All India Rural Financial Inclusion Survey (2021- 22),  the  analysis  employs  a  comparative descriptive  framework.  Findings  indicate  that PM-KISAN funds are predominantly utilized for household  consumption  (68%  of  beneficiaries) and loan repayment (49%), playing a significant role in short-term stability. However, only 24% of households  report  using  the  transfer  for agricultural  inputs,  primarily  on  recurrent expenditures rather than long-term capital assets. The  annual  transfer  of  ₹6,000  is  found  to  be effective as a liquidity tool for debt servicing but is insufficient to structurally reduce debt burdens or catalyze transformative investment. The paper concludes  that  while  PM-KISAN  functions effectively as a social protection mechanism that enhances immediate consumption resilience, its design  limits  its  capacity  to  build  long-term productive resilience. To bridge this gap, the study recommends  integrated  policy  measures, including "PM-KISAN Plus" co-payment models 
for specific investments, convergence with formal credit  channels  and  scaled  transfers  based  on vulnerability.