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Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA)

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September 21, 2018

Why in news?

The Centre recently launched the Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) to ensure better prices for farm produce.

What is PM-AASHA?

  • The three schemes that are part of AASHA are:
  1. the Price Support Scheme (PSS)
  2. the Price Deficiency Payment Scheme (PDPS)
  3. the Pilot of Private Procurement and Stockist Scheme (PPPS)
  • These three components will complement the existing schemes of the Department of Food and Public Distribution.
  • They relate to paddy, wheat and other cereals and coarse grains where procurement is at MSP now.
  • PSS - Under the PSS, physical procurement of pulses, oilseeds and copra will be done by Central Nodal Agencies.
  • Besides, NAFED and Food Cooperation of India will also take up procurement of crops under PSS.
  • The expenditure and losses due to procurement will be borne by the Centre.
  • PDPS - Under the PDPS, the Centre proposes to cover all oilseeds.
  • The difference between the MSP and actual selling/modal price will be directly paid into the farmer's bank account.
  • Farmers who sell their crops in recognised mandis within the notified period can benefit from it.
  • PPSS - In the case of oilseeds, States will have the option to roll out PPSSs in select districts.
  • Under this, a private player can procure crops at MSP when market prices drop below MSP.
  • The private player will then be compensated through a service charge up to a maximum of 15% of the MSP.

What is the need?

  • The reach of the current MSP procurement system is very poor both in terms of geography and the crops covered.
  • Recently, the Centre announced a hike in MSPs for several Kharif crops.
  • It said, it will pay farmers the cost of production (as determined by CACP) plus a 50% ‘profit’ while procuring.
  • However, this works well only for paddy, wheat, and select cash crops where there is direct procurement by the industry.
  • The government-driven procurement is almost nil in crops such as oilseeds, thereby defeating the purpose of MSPs.
  • Besides, due to various other factors, there is increasing farmer unrest across the country.
  • Prices of key agricultural commodities have fallen below their MSP (minimum support price).
  • The AASHA scheme thus tries to address the gaps in the MSP system and give better returns.
  • It also promises to plug the holes in the procurement system.

What are the possible benefits?

  • AASHA points to an innovative, MSP-plus approach to the problem of non-remunerative prices.
  • The different components would cover the gaps in the procurement and compensation mechanism for crops.
  • It will also help revive the rural economy by assuring better income to farmers.
  • With better prices across crops, the new scheme may ensure crop diversification and reduce the stress on soil and water.
  • In the current physical procurement, government agencies end up stock-piling foodgrains.
  • This results in incurring storage costs and significant wastage and leakages as well.
  • So if effectively implemented, the AASHA scheme will result in savings for the Centre.
  • As, there is no need for going through the hassle of physical procurement, storage and disposal.

What are the challenges and possible ways out?

  • PDPS - The experience of Madhya Pradesh which implemented the PDPS under the Bhavantar Bhugtan Yojana last year
  • Ground level checks revealed that traders plotted with each other and depressed the prices at mandis.
  • They forced farmers to sell at lower prices and pocketed the compensation from the government.
  • Many small and marginal farmers are unable to sell their produce under the Bhavantar scheme.
  • They face the double burden of lowered price and no compensation.
  • So the key here will be the implementation as failure to create a system of checks and balances can derail them.
  • PSS - The PSS would be easier to implement, with nodal agencies doing the procurement.
  • However, providing funds would be a key challenge for the Centre.
  • The state governments consider it financially burdensome.
  • If all States apply to NAFED/FCI for procurement of oilseeds or pulses, the agencies will fall short of funds.
  • The states may also find it hard to implement it from the current kharif marketing season, which begins soon.
  • The Centre needs to figure out how to handle procurement and disposal efficiently.
  • PPSS - The PPPS may work, but private procurers may be wary of the Centre’s delayed payments.
  • To ensure that AASHA works, the Centre first needs to break the trader lobbies at mandis.
  • This could be done by widening the competition by inter-linking mandis.
  • e-NAM promises to do so, but, States need to be proactive in undertaking regulatory reforms.

 

Source: BusinessLine

 

Quick Fact

NAFED

  • National Agricultural Cooperative marketing Federation of India (NAFED) was established in 1958.
  • It is registered under the multi state co-operative societies act.
  • Its objective is to promote co-operative marketing of agricultural produce to benefit the farmers.

FCI

  • The Food Corporation of India was set up under the Food Corporation's Act 1964, with the following objectives -
  1. effective price support operations for safeguarding the interests of the farmers
  2. distribution of foodgrains throughout the country for public distribution system
  3. maintaining satisfactory level of operational and buffer stocks of foodgrains to ensure National Food Security
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