In a bid to please the agitated and distressed farmers, the central government is now mulling plans for introducing new schemes intended to compensate the farmers when the market prices of their crops fall below the prescribed MSP.
Reports have been doing rounds about the Agriculture Ministry preparing a Cabinet Note on three new market intervention models after holding informal consultations with group of ministers headed by Home Minister Rajnath Singh. The three models devised by the ministry are: Market Assurance Scheme (MAS), Price Deficiency Procurement Scheme (PDPS) and Private Procurement and Stockists Scheme.
The proposed schemes will entitle, as reported by the Economic Times, both state government and private entities to procure agrarian produce other than wheat and paddy, to ensure MSP to farmers.
“The objective of the proposed policy is to improve the speed of response and effectiveness of procurement in case when prices drop below the MSP”, reported the daily.
Quoting a senior government official PTI reported, “ The policy aims to give liberty to states to implement either one of the models of procurement.”
As per the new policies, state governments will be responsible to implement the Market Assurance Scheme (MAS) and it will be entitled to make immediate decisions based on local conditions, to enter the market and start procurement. The state governments will also be empowered to procure the produces through its own agency or through any other private agency authorized by it.
Apart from procurement and liquidation of farm produce, the onus will be on the state government to set up a corpus fund and arrange logistics accordingly.
Under the PDPS model, which is a varied version of Bhavantar Bhugtan Yojana of Madhya Pradesh, the state government will compensate the farmers with the difference between the MSP and a model price if the sale price of produce falls below the MSP.
And, with the aim of roping in non-state parties, the government is also on the anvil to invite private agencies to involve them in the procurement of farm produces under the Private Procurement and Stockists Scheme. The private agencies will be incorporated through bidding system and the participating agencies will enjoy tax incentives along with a commission for procurement.
However, implementation of these proposed schemes will see off the existing policies such as Price Support Scheme and Market Intervention Scheme.
The Fiscal Foes
Apart from the discontinuation of time-tested policies the three new schemes will also entail huge monetary implications for state governments. And, the Central Government seems shirking it’s duty of doubling farmers’ income by making procurement a state subject. Once the new schemes are implemented, central government will only compensate state governments for the losses incurred while procuring the farm produces in the ratio upto 30 to 40 percent.
Calculating the central government’s compensation towards states, the Centres’ total expenditure would work out to be around 40,331 crore and 53,775 crore respectively, in case the states incur losses of 15 percent and upto 25 percent of value of MSP.
However, farmers’ leaders are concerned that the states will not be able to procure all the agrarian produces as the expenditure would cost the state exchequer heavily. Speaking to Hind Kisan, Kedar Sirohi, founder-member of Aam Kisan Union said, “If the state of Madhya Pradesh happens to produce crop worth Rs 2.5 lakh crore and the price happens to fall down by 20 to 30 percent, it will create a huge deficit of Rs 80,000 crore”. Questioning the government’s push for new schemes Sirohi asked, “Where will the state government create the required corpus fund from when the state’s total budget is Rs 2,40,642 crore and agriculture budget allocation is Rs 36, 498 crore”?
Accusing the Bharatiya Janata Party (BJP) government of allocating insufficient funds for agriculture Dr. Sunilam, founder of National Alliance for People’s Movement (NAPM) said, “State governments will not be able to do justice to the farmers’ right to remunerative prices as they are already in destitution. We have for long been demanding to the central government to set up a fund of Rs 50,000 crore dedicated to farmers’ welfare but the government keeps coming up with new schemes to pass the buck.”
These concerns find echo among farmers who are apprehensive about the PDPS model as they feel that these new schemes will meet the same fate as Bhavantar Bhugtan Yojana which had failed to address the farmers woes in Madhya Pradesh. Terming the PDPS model as a devise to loot the farmers Dr. Sunilam said, “When Bhavantar was implemented in Madhya Pradesh, traders bought onions for Rs 2 per kg from the farmers and sold it to the government at Rs 8. These traders then reduced the price of goods at local mandis but sold the procured produce at much a higher price at the APMCs”.
While the government argues that it is important to involve private agencies to expedite and increase the quantity of procurement, experts fear that the government is in fact creating a conducive ground for the big corporates to introduce contentious contract farming in the country.
While the government is busy reviving old schemes in new corporate friendly avatars there is still deafening silence on providing MSP at 50 percent of the C2 costs (comprehensive cost including imputed rent and interest on owned land and capital), an old sought after demand by farmer groups and agricultural experts.