Gujarat Launches ₹6,000/acre Cash-Transfer Scheme for Farmers in Bold Welfare Move

Why Gujarat Chose This Intervention

The decision by the Gujarat government reflects a strategic response to several intertwined pressures: rural-income stagnation, volatility in commodity prices, rising input costs for farmers and the need to reposition agriculture as a driver of inclusive growth. Agriculture still employs a significant share of Gujarat’s workforce, especially in semi-urban and rural districts where industrial spill-over remains uneven.

By pledging a uniform cash benefit of ₹6,000 per acre, state policymakers aim to simplify subsidy architecture—moving away from complex input subsidies and multiple fragmented programmes, toward a single, transparent direct transfer that offers flexibility to farmers. The approach mirrors a broader global shift toward cash-based welfare for agriculture, rather than in-kind or commodity subsidies.

Scheme Mechanics and Implementation Design

Under the newly announced scheme—part of the 2025-26 state budget—the following eligibility and rollout plan apply:

• All farmers with land-holdings registered in the state land-records system and Aadhaar-linked bank accounts are eligible.
• Farmers will receive ₹6,000 per acre annually, credited in **two instalments**: ₹3,000 before sowing season and ₹3,000 after harvest-report verification.
• State anticipates about **30 lakh farmers** participating, with about 3 crore acres of land coming under the scheme in the first year. Annual budgeted outlay is ₹18,000 crore (₹6,000 × 3 crore acres).
• Payment transfer will use the state’s existing Direct Benefit Transfer (DBT) infrastructure; the agriculture-department portal is linked with land-records database, Aadhaar/PAN verification and bank-linkage checks to minimise leakages.
• To qualify, farmers must attend a one-time online/ag-centre training module on sustainable practices and subsidy usage; this is designed to improve farmer behaviour and accountability.
• Monitoring dashboards will track payments, land-verification, and invest usage, with criteria for non-compliance (e.g., if the land is fallow for more than two consecutive seasons, payment may be deferred).

Budgetary and Economic Implications

The fiscal commitment—₹18,000 crore annually—is extensive for a state budget. Analysts note several implications:

• The outlay constitutes roughly **2.5 % of Gujarat’s expected GSDP growth allocation**, signalling the political and economic priority placed on rural welfare.
• By simplifying subsidy flows into a cash transfer, the state expects gains from **reduced administrative cost**, **fewer intermediaries**, and **higher farmer autonomy**, which may improve multiplier effects in rural consumption.
• The scheme may stimulate **rural demand**—farmers with additional income are likely to increase consumption of goods and services, which benefits local economies, agro-inputs, and local micro-enterprises.

However, the long-term success depends on whether the cash transfers are additive (i.e., not replacing other subsidies) and whether they translate into productive investment, not mere consumption. The state has emphasised that the reward is not conditional on crop type, giving farmers flexibility but also raising questions about targeting and efficiency.

How Farmers and Stakeholders Have Reacted

The announcement has been broadly welcomed by farmers’ associations. One union leader from Kutch district said, “The simplicity of ₹6,000 per acre offers clarity—no complex tracking of input subsidies, no eligibility confusion.”

Input-vendors and agri-commerce players also welcomed the decision, seeing potential uptick in purchases of seed, equipment and services. Financial-inclusion advocates highlighted the benefits of linking bank accounts and clearing long-standing problems of subsidy leakage in older systems.

That said, some voices cautioned: small-and-marginal-farmers with less than one acre may receive smaller cash amounts; likewise, farmers in high-cost zones (irrigated vs rain-fed) may feel the flat-acre rate is insufficient. Crop-diversification and input-cost escalation are also concerns—they pointed out that ₹6,000 may not fully offset rising diesel, fertilizer and labour costs in some regions.

Complementary Policies and Programme Alignment

To maximise impact, the Gujarat government announced a bundle of complementary measures alongside the cash-transfer scheme:

• Enhancement of land-pooling and irrigation-extension services in the 100 identified districts under the “Krishi Dakshata” programme, including modern drip irrigation subsidies and watershed rejuvenation.
• Revision of seed-subsidy policy—free/high-subsidy seeds to be replaced gradually with vouchers for seed-purchase using the cash-transfer amount.
• Expansion of a state-led “Farm Credit Access” portal aiming to raise credit uptake among small farmers, with linkage to the cash-transfer scheme for credit-score enhancements.
• Creation of district-level “Agro-Incubation & Diversification” cells to encourage farmers to shift to high-value crops, organic farming and allied-activity clusters, using the additional income as seed capital.

Risks and Execution Challenges

While the scheme is ambitious, notable risks remain:

• **Fiscal sustainability**: Committing ₹18,000 crore annually for multiple years locks in a large recurring expenditure. If growth slows or central transfers shrink, states may face budget strain.
• **Land-records mismatch**: In many districts, land-record verification and updates are incomplete. Mis-recorded holdings could delay payments or lead to exclusion.
• **Targeting marginal holdings**: Farmers with less than one acre (who still form a large share) will receive proportionally lower benefits; ensuring they are not left behind is critical.
• **Inflation and input-cost escalation**: With rapid cost escalation (fertiliser, diesel, labour), a flat payment may lose real value unless adjusted over time.
• **Behavioural change**: The assumption that cash will translate into productive investment, rather than consumption, may not hold unless supported by extension-services and credit linkage.

Comparative Context: How Gujarat’s Move Stands Out

India’s state-led farmer welfare programmes have historically included input-subsidies, procurement supports, credit exemptions and cash transfers. What makes Gujarat’s scheme stand out are:

• A high floor benefit of ₹6,000 per acre—among the highest such state-funded direct payments announced so far.
• The simplicity of a flat-acre rate covering all eligible farmers, reducing administrative burdens and eligibility confusion.
• The phased rollout, tied with digital-payment infrastructure, banks and Aadhaar—allowing for quicker distribution and monitoring.

By aligning cash-transfer with modern state-digital-infrastructure, Gujarat may serve as a template for other states seeking to transition away from fragmented input-subsidy systems to more transparent and demand-driven models.

What to Watch: Outcomes and Indicators for Success

Success will be judged not only by transfer volume, but by broader outcomes. Key indicators include:

• Percentage of eligible farmers receiving payment by the next sowing season.
• Increment in farm-investments (irrigation, equipment, improved seed) made possible by the additional cash.
• Improvement in cropping intensity, yield per acre and diversification into high-value crops.
• Changes in rural consumption and savings behaviour within the farming community.
• Long-term fiscal trend: whether the scheme remains funded without crowding out other rural development spending.

Conclusion: A Bold Step for Gujarat’s Farming Future

Gujarat’s announcement of ₹6,000 per acre direct cash transfer is a major policy pivot—moving from traditional subsidies to direct welfare-payments. If executed well, it could boost farmers’ incomes, streamline subsidy flows, increase consumption and support rural economic growth.

Yet, ambition will need delivery. The actual benefits to farmers, and whether the additional income results in sustainable investment and productivity gains, will determine whether this scheme remains a headline or becomes a model for other states.

For now, Gujarat has signalled that farmer welfare and rural prosperity are strategic priorities—not afterthoughts in a growth agenda. The next sowing season will show whether the cash pledge translates into real-world change.