Govt Blinks on Fixing Procurement Infrastructure, Announces Price Support Schemes

The government’s announcements on Wednesday to ensure that farmers get the benefit of the MSP have done little to reinforce the procurement infrastructure which was a key recommendation of the Centre’s NITI Ayog.

New Delhi: On Wednesday, the Union cabinet announced a range of measures aimed at ensuring that farmers benefit from the minimum support prices (MSP) announced by the Centre. It announced a new umbrella scheme called the ‘Pradhan Mantri Annadata Aay Sanrakshan Abhiyan’ and abbreviated to PM-AASHA to be implemented with effect from the new kharif marketing season starting October. The new scheme will have three components: a price support scheme (PSS) that has existed for several years; a price deficiency payment scheme (PDPS) modelled on Bhawantar Bhugtan Yojana; and a private procurement and stockist scheme (PPPS). As much as Rs 15,053 crore has been allocated under this scheme.

“The PM-AASHA is aimed at ensuring remunerative prices to farmers for their produce as announced by the union budget for 2018. This is a historic decision,” said Radha Mohan Singh, minister for agriculture.

Under the PSS, Central nodal agencies will procure pulses, oilseeds and copra with ‘proactive role of state governments’. The Food corporation of India (FCI) and the National Agricultural Cooperative Marketing Federation of India (NAFED) will help implement the scheme. The cabinet also announced that the government will procure 25% of the marketable surplus of farmers for eligible crops. The Centre has made a provision of Rs 16,550 crores to be provided as bank guarantee for the agencies to procure from farmers.

Under the PDPS, the state will provide the difference between the prices prevailing in mandis and the MSP. All oil-seeds are to be covered under PDPS. This scheme is modelled on the Bhawantar Bhugtan Yojana that has been implemented by the Madhya Pradesh state government. There will be no physical procurement of crops.

In lieu of PSS and PDPS, in certain pilot districts the PPPS will be tried out. Empanelled private agencies will procure oilseeds in coordination with the government. The private agencies will be provided certain concessions. To begin with, the scheme will be tested in eight districts.

However, the Cabinet’s announcements did little to reinforce the procurement mechanism infrastructure in the country which largely only works for two crops – wheat and rice. According to a survey conducted by the National Sample Survey Office (NSSO) in the 70th round in 2013, only 6% of farmers are able to sell their produce at MSP.

A 2017 study by K.S. Aditya, S.P. Subhash, K.V. Praveen, M.L. Nithyashree, N. Bhuvana and Akriti Sharma found that only 24% households, at the most, were aware about the MSP of crops grown by them. “Although MSP is announced for the whole of India, the operation is limited only to few states where the designated government agencies procure the produce from farmers,” the study stated. “Except for crops like rice and wheat, quantity procured is very limited leading to low level of awareness,” it added.

According to a 2016 NITI Ayog evaluation report 79% farmers responded with ‘no’ when asked if they were satisfied with the MSP regime. Some of the reasons for their dissatisfaction were delay in payments, lack of infrastructure at procurement centres, distance to procurement centres and delayed announcement of MSP rates. NITI Aayog’s evaluation also found that there were several states where the procurement infrastructure facilities were ‘inadequate’.

The NITI Ayog recommended that steps be taken to improve “facilities at procurement centres, such as drying yards, weighing bridges, etc. should be provided to the farmers. More godowns should be set up and maintained properly for better storage and reduction of wastage. The procurement centres should be in the village itself to avoid transportation costs”.

However, the government’s announcements on Wednesday to ensure that farmers get the benefit of the MSP have done little to reinforce the procurement infrastructure which was a key recommendation of the Centre’s NITI Aayog.