New Delhi: Following consecutive years of record harvest, low crop prices, and protests by farmers, the centre is looking at a combination of schemes to ensure that growers get the benefit of government-announced minimum support prices (MSP).
Following the budget announcement earlier this month, the centre’s think tank Niti Aayog is likely to propose a road map with a combination of standardized schemes, a top agriculture ministry official said on Friday on condition of anonymity.
The official added that these schemes may take the form of direct payments to farmers, some form of deficiency price payment, and physical procurement schemes which states may choose from.
Currently some states are implementing versions of these schemes on their own. While Madhya Pradesh launched a deficiency price payment scheme (where farmers are paid the difference between MSP and prices at which they sell in the market), Telangana recently launched a direct transfer scheme of Rs8,000 per acre for farmers. Recently, the agriculture ministry also proposed a market assurance scheme to states where they can procure pulses and oilseeds with financial support from the centre.
The government will likely roll out these schemes in time for the next Kharif harvest in October. In the first year, these new schemes may cost the centre anywhere between Rs12,000 and Rs15,000 crore while some of the schemes may also be credit linked, the official quoted above said.
In his budget speech, finance minister Arun Jaitley had directed NITI Aayog “to put in place a foolproof mechanism so that farmers get an adequate price for their produce". The centre’s plan is to ensure that farmers reap the benefit of announced minimum support prices; currently while MSPs are announced for 23 crops, the government actually procures only rice, wheat and some pulses, leaving farmers to manage price risks on their own.
“It is a welcome step to introduce a combination of schemes to ensure better prices to farmers, however these have to be piloted first... there are problems with the Madhya Pradesh scheme which depressed market prices, and the Telangana scheme is yet to be implemented," said Siraj Hussain, former agriculture secretary and a visiting senior fellow at the Delhi-based Indian Council for Research on International Economic Relations.
“Our calculations show that if market prices are lower by 10% compared to MSPs, it would cost the government about Rs42,000 crore to compensate farmers," Hussain added.