Performance of cash transfer program on farmers’ livelihood: evidence from PM-KISAN scheme of India

Introduction Research into various aspects of vulnerability and poverty has played a key role in shaping cash transfer systems. Cash-based direct benefit transfers (DBT) are frequently discussed, as they help reduce corruption and limit intermediary involvement, which often impedes policy implementation in countries like India. Small and marginal farmers (SMFs), constituting 86% of India’s farming population, are essential for sustainable agricultural growth and ensuring food and nutrition security. The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme provides Rs.6000 annually to the farmer families via DBT mechanism. Despite reports and information from various government sources, significant concerns remain regarding the performance of PM-KISAN scheme in improving living conditions of SMFs. Methods For having the highest number of SMFs, a research study was conducted in Bihar and Uttar Pradesh. Two cluster of villages from each of these two states were chosen by simple random sampling (SRS) method. An ex post facto research design was used; data was gathered from 240 SMFs, with 120 beneficiaries and 120 non-beneficiaries, using a stratified disproportionate simple random sampling technique. The study used 18 indicators related to livelihood assets—human capital, social capital, natural capital, physical capital, and financial capital—to generate a Livelihood Index (LI) through Principal Component Analysis (PCA). Results The beneficiaries of the scheme had an average LI score of 0.396, while non-beneficiaries had a score of 0.366. Propensity Score Matching (PSM) was employed to compare the beneficiaries and non-beneficiaries in order to determine the impact of the scheme. In the Livelihood Index of beneficiaries, in comparison to non-beneficiaries, there was a significant improvement of 3.34 to 4.13 percentage points, according to the analysis, which utilized a variety of matching algorithms. Discussion Implications from the study suggests that PM-KISAN should be integrated into a broader rural development strategy to maximize multiplier effects. By combining cash transfers with complementary initiatives like modern technology adoption and high-yield seeds, farmers can make productive investments that could enhance their livelihood status.