The Rythu Bandhu scheme has reduced dependence on informal moneylenders among Telangana’s landowning farmers, but a study across five districts shows that its benefits have been weakest where financial vulnerability is greatest. The findings point to a structural problem in agricultural support: a programme designed around recorded land ownership cannot reliably reach tenant cultivators, marginal farmers or land parcels affected by gaps in official records.
The study by the Centre for Economic and Social Studies, based on a survey of 817 households, found that informal borrowing declined between 2015 and 2020 among small, medium and large farmers. Among small farmers, the share borrowing from informal sources fell from 84.7 per cent to 70.2 per cent. For medium farmers, it declined from 82.5 per cent to 62.1 per cent, while the share among large farmers fell from 78.1 per cent to 64.9 per cent.
The pattern was markedly different for marginal farmers. Their dependence on informal borrowing declined only from 91.8 per cent to 90.8 per cent. A reduction of one percentage point over the period indicates that the scheme’s liquidity support did little to change the credit position of the most resource-constrained cultivators covered by the survey.
This contrast is central to understanding the scheme’s impact. Rythu Bandhu is formally open to landowning farmers, so its eligibility structure connects assistance to the person recorded as owning agricultural land. But cultivation and ownership do not always coincide. Tenant farmers may work land without holding the documents required to receive direct benefits, while landowners may be absent from the farm or may not be the people bearing the cost and risk of cultivation.
The CESS study therefore describes a programme that appears to have improved liquidity for relatively better-positioned landowners while leaving poorer cultivators exposed to debt and financial instability. The issue is not simply whether financial assistance exists. It is whether the design of that assistance identifies the person who actually cultivates the land and needs working capital.
The study’s coverage findings show how land administration compounds this problem. Although Rythu Bandhu is formally available to landowning farmers, 27.72 per cent of farmland in the surveyed villages was not covered by the scheme. The report attributed the exclusions to missing or inaccurate pattadar passbooks, mismatches between Aadhaar, bank accounts and land records, and land classified as forest, podu, community or wasteland.
The burden was heavier on marginal farmers. About 30.59 per cent of their land was excluded, compared with 14.47 per cent of land held by large farmers. This is significant because marginal farmers generally have less capacity to absorb a delayed payment, an administrative error or the loss of access to formal credit. When the same record problem affects a larger landholding and a smaller one, the consequences are not equal.
The village-level findings underline the uneven geography of exclusion. In Bussapur, nearly 60 per cent of forest-classified land was outside the scheme. In Gareebpeta, 58.4 per cent of land remained uncovered. These figures suggest that the reach of an agricultural support programme depends not only on the formal eligibility rule but also on how land categories, titles and digital records are maintained and reconciled.
That makes the question partly an administrative one. A farmer may be excluded because a land record is inaccurate, because identity and banking details do not match, or because the land falls within a classification that the programme does not recognise for payment. In each case, the state’s capacity to maintain and connect records becomes a condition for accessing financial support.
The reference to the Dharani portal in the study is important in this context. The report calls for administrative gaps in the land-record system to be fixed, alongside the resolution of tribal land-title issues. The findings presented in the study indicate that agricultural welfare cannot be separated from the quality of the land administration system on which eligibility is based.
The proposed redesign would shift Rythu Bandhu from an ownership-based entitlement towards cultivation-based support. The report recommends including small and marginal landowners and tenants operating less than five acres, setting a five-acre ceiling on beneficiaries, and excluding absentee or non-cultivating landowners. It also calls for the documentation of tenant farmers and agricultural labourers.
These recommendations change the administrative task substantially. An ownership-based scheme can rely primarily on land records and linked payment details. A cultivation-based scheme would need the state to identify who is actually farming a parcel, establish a credible process for recording tenancy, and reduce the risk of disputes between owners and cultivators. The study does not provide a design for such a system, but its findings show why the existing arrangement leaves a significant group outside direct support.
Tenant farmers are particularly important to this discussion because they may carry cultivation costs without possessing the documents that define eligibility. According to the reported findings, tenants continued to depend heavily on informal lenders. Their exclusion means that the scheme’s apparent success in reducing informal borrowing among some landowners cannot be treated as a measure of improved agricultural credit access for all cultivators.
The data also complicates any simple assessment of whether Rythu Bandhu is successful. The decline in informal borrowing among small, medium and large farmers is a measurable improvement. Yet the much smaller change among marginal farmers, combined with the exclusion of tenant cultivators and uncovered land, shows that aggregate gains can coexist with a persistent protection gap.
This is a familiar governance challenge in welfare delivery: a programme may be operationally successful for people who are visible in official databases while remaining weak for people whose livelihoods are less legible to the administrative system. In the case of Rythu Bandhu, the CESS findings connect that visibility problem to land titles, tenancy, identity records, bank accounts and land classification.
The study’s recommendations also place limits on the idea that expanding coverage alone will solve the problem. If payments continue to follow recorded ownership, adding more beneficiaries may not reach tenants or agricultural labourers. If records are expanded without resolving tribal land-title questions and classification disputes, vulnerable communities may remain excluded even when the scheme’s stated eligibility is broad.
The five-acre ceiling proposed by the report reflects an effort to concentrate support on smaller cultivators. Its recommendation to exclude absentee and non-cultivating landowners similarly seeks to align public assistance with actual agricultural activity. These proposals would make targeting more precise, but they would also require clear definitions, reliable field-level documentation and an administrative process capable of handling contested claims.
What the evidence confirms is that Rythu Bandhu has had uneven effects. Informal borrowing fell among the small, medium and large farmers covered by the survey, while marginal farmers experienced only a marginal change. At the same time, more than a quarter of farmland in the surveyed villages was outside the scheme, with exclusion rates higher for marginal holdings than for large farms.
What remains unresolved is how Telangana can identify tenant cultivators and other vulnerable agricultural workers without creating new documentation barriers. The next institutional steps indicated by the study are clearer land and tenancy records, correction of mismatched identity and banking information, resolution of tribal land-title issues and improvements to the Dharani portal. Until those changes are addressed, the scheme’s ownership-based structure will continue to determine who is visible to the state—and who remains dependent on informal credit.
