India's COVID-19 social assistance package and its impact on the agriculture sector

This study examines the impact of India’s government assistance package (known as Pradhan Mantri Garib Kalyan Yojana or PM-GKY), announced immediately after the COVID-19 lockdown, on the procurement of agricultural inputs for the upcoming farming season. Methods: The study uses a quasi-experimental method and survey data from 1,789 smallholder households in three northern Indian states (Rajasthan, Madhya Pradesh, and Uttar Pradesh). Results: The result suggests that the fungibility of funds received under the government transfer package was significant in alleviating credit constraints and increasing agricultural investments in agricultural inputs. The farmers who received benefits from the PM-GKY scheme spent significantly more on the procurement of seeds, fertilizers, and pesticides. Conclusions: The disbursement of cash transfers in the three states showed that emergency relief packages had reached the vulnerable sections of Indian society. Overall, 89-94% of households benefited from direct cash transfers. Perhaps lower transaction costs, minimal leakages, and immediate delivery make a strong case for direct cash transfers. The above advantages facilitate the provision of relief to a large proportion of vulnerable sections of Indian society in a short period.