Enforce Farmers’ Pension Scheme


Uttam Maharjan

A pension scheme for farmers was announced in the budget for the fiscal year 2022/23. Although this scheme seems to be a new scheme designed for the welfare of farmers who constitute over 65 per cent of the total population, such a scheme was also announced in the budget for the fiscal year 2016/17. The Farmers’ Pension Scheme, as it is called, aims at encouraging those involved in farming to stay back in the country and contribute to the national economy by increasing productivity in the agriculture sector. 

Today, more and more people are migrating abroad for foreign jobs as there is a paucity of job opportunities in the country. This has hampered agricultural activities, especially in the rural areas. With increasing migration to foreign countries for jobs, the manpower required for agriculture has dwindled across the country. In the past, over 90 per cent of the population was engaged in agriculture and allied activities. The percentage is a little over 65 now. 


To boost agricultural productivity and motivate farmers to be involved in agriculture in earnest, the pension scheme may have been mooted in the budget. It may be relevant to mention such a scheme announced in the 2016/17 budget. Studies back then showed that it was feasible to implement the Farmers’ Pension Scheme. As per the scheme, the government was to set up a pension fund and farmers would contribute one per cent of the total annual production to the fund. The contribution was to be calculated in monetary terms. 

It was suggested that the government segregate agriculture into subsistence and commercial agriculture and determine the premium amount differently for different categories of farmers: farm labourers and deprived farmers; smallholder farmers; middle-income farmers; and commercial farmers. The required documents would be citizenship certificates or land ownership certificates. Further, those not owing land could produce relevant documents and take part in the scheme. Those taking part in the scheme would be obliged to pay the premium in twelve installments.

According to the report entitled “Farmers’ Classification and Pension Scheme” prepared by Hari Roka, a political analyst, to operate the pension fund, the government was to contribute half the money to the fund. Farm workers’ annual premium would be Rs. 5,000 and would be entitled to a monthly pension of Rs, 4,000. However, their age would be at least 55. Marginal farmers would contribute a premium of Rs, 7,000 per annum to the fund and would be entitled to a monthly pension of Rs. 5,000. Farmers belonging to the petite bourgeoisie would pay an annual premium of Rs. 9,000 and would be entitled to a monthly pension of Rs. 7,000. 

Likewise, large land-holding farmers would be entitled to a pension of Rs. 10,000 per month after contributing Rs. 15,000 per month to the fund but the age limit would be fixed at 65. The age limit would be based on the assumption that large land-holding and commercial farmers would outlive smallholder, hardworking farmers. An integrated service centre would be established for the collection and distribution of premiums and pensions and the centre would be operated by the farmers themselves as they would know the real beneficiaries. The centre would be supported by the government. Both the pension fund and the centre would be monitored by local or state and federal governments. 

The pension scheme would be operated in 10 to 15 districts in the hills, Terai and mountains as a pilot project by categorising farmers and households. After six months, the scheme would be extended to another 20 districts.  The pension fund would be financed by premiums paid by the participating farmers and the seed money or subsidy supplied by the government. However, the scheme could not move ahead and was aborted despite efforts to implement it.

Now, a similar scheme has been mooted in the budget for the upcoming fiscal year. The Social Security Scheme is in place now. Government employees and employees from the private sector are involved in the scheme although the number of participating employees is not encouraging. The scheme is contribution-based. Likewise, the recently mooted Farmers’ Pension Scheme will also be contribution-based. The scheme will be implemented under the Government Programme for Farmers. A Farmers’ Pension Fund will be set up and participating farmers will make contributions to the fund every month. 

The government will contribute 10 per cent of the premiums deposited by the farmers to the fund. Further, the government will contribute Rs. one billion to the fund as seed money. 


To implement the scheme, the government will have to enact an act and develop guidelines. As the government has the Roka report regarding such a scheme prepared in 2016, the report can be studied to develop guidelines. However, there are challenges of implementing the scheme. The government does not have accurate records of farmers scattered throughout the length and breadth of the country. Farmers will have to be classified into various categories. Without reliable data, such a classification will not be possible. 

Further, not all farmers will be able to pay required premiums into the find. The government should also look into this matter. The government may not be in a position to pay premiums into the fund on behalf of needy farmers. Moreover, a strong mechanism will be required to implement and monitor the scheme. However, the success of the scheme will depend on the will and initiative of the government and farmers’ willingness and ability to pay premiums. If successful, the scheme will definitely enhance the quality of life of farmers. 

Maharjan has been regularly writing on contemporary issues for this daily since 2000. uttam.maharjan1964@gmail.com) 

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