Ahead of the Assembly elections in five States later this year and Lok Sabha polls in 2019, the Union Cabinet on Wednesday approved a Rs 15,053-crore new procurement policy ‘Pradhan Mantri Annadata Aay SanraksHan Abhiyan’ (PM-AASHA) to ensure that farmers growing 23 kharif crops get minimum support price (MSP) announced by the Government.
The policy allows States /Union Territories to choose a compensation scheme and rope in private agencies for procurement to ensure a profitable price to farmers. The Cabinet also decided to give additional Government guarantee of Rs 16,550 crore making it Rs 45,550 crore in total. The procurement of kharif crops would begin in the next few weeks.
The new scheme will be a mix of sub-schemes which will involve direct procurement from farmers (price support scheme or PSS), paying them for losses incurred when wholesale market prices are lower than announced MSPs (price deficiency payment scheme or PDPS), and Pilot of Private Procurement Stockist Scheme (PPSS) — to undertake procurement when prices of commodities fall below the MSP level.
The performance of PM-AASHA will be critical in a year when several agriculturally-important States like Madhya Pradesh, Rajasthan and Chhattisgarh, which grow pulses and oilseeds, will go to polls. Over the past two years, driven by higher production, wholesale prices of these crops fell sharply, often lower than MSP, forcing farmers to sell at a loss.
According to Union Agriculture Minister Radha Mohan Singh, the new procurement policy will ensure that the farmers get the MSP at a time when the market prices fall below the benchmark prices set by the Government. “Under the new policy, the State Governments will be given an option to choose multiple schemes to protect farmers when prices fall below the MSP. This will mark a significant departure from the current mechanism, under which the crops are purchased by the Government and the MSP price is transferred to farmers’ account through Direct Benefit Transfer,” Singh said. One scheme will focus on compensating oilseeds farmers if rates fall below the MSP, and another will allow States to rope in private players for procurement.
The Modi Government had announced a new procurement policy in July shortly after the Government announced the biggest ever hike in MSP for 23 kharif crops. The new mechanism is expected to be crop specific. According to officials, the new scheme ‘Price Deficiency Payment Scheme (PDPS)’ has been framed on the lines of Madhya Pradesh Government’s Bhavantar Bhugtan Yojana (BBY) to protect oilseeds farmers only.
Under the PDPS, the Government will pay to farmers the difference between the MSP and monthly average price of oilseeds quoted in wholesale market. This would be implemented for up to 25 per cent of the oilseeds production in a State. Besides this, the States are given option to rope in private players for oilseeds procurement on a pilot basis. Both PDPS and private players’ participation will be exclusively for oilseeds because the Government wants to bring down the country’s import dependence on cooking oils, the sources said.
Under the new policy, the states will also have an option to choose the existing Price Support Scheme (PSS), under which central agencies procure commodities covered under the MSP policy when prices fall below the MSP. “The states can choose either PSS or PDPS or engage private players in procurement to ensure MSP to farmers,” the sources added.