State Initiatives for Addressing Agrarian Distress

What is the issue?

• Farm distress is likely to be a major aspect in the upcoming Union Budget.
• In this context, schemes piloted by Madhya Pradesh and Telengana government to ease farmer woes is worthy of discussing.

What is the scenario in the sector?

• Agri-GDP growth has fallen to around 2% per annum in recent years and the real incomes of farmers have fallen as well.
• The sector’s growth is much below the government’s target in production and in doubling farmer incomes by 2022.
• With assembly elections in 10 states due later this year, the states going to the polls are making attempts to woo farmers.
• While some have announced loan waivers, others are trying to fix farmers’  financial distress emanating from tumbling farm prices.

What is Madhya Pradesh’s Scheme?

• Bhavantar Bhugtan Yojana - BBY is a “price deficiency payment” (PDP) scheme, being undertaken by the government of Madhya Pradesh.
• BBY assures that farmers at least get the MSP value for their crops.
• 8 kharif crops namely Soybean, maize, urad, tur, moong, groundnut, til, ramtil are covered under the scheme.
• The Structure - Under the scheme, farmers will have to first register on a portal and their sown area is then verified by government officials.
• Subsequently, the farmer allocated a time slot to bring his produce to the mandi, where the quantity eligible for deficiency pricing is determined.
• The quantity is determined based on the average productivity of the particular district and the cropped area of the particular farmer.
• The farmers receive the difference between “average sale price” (market price) and “minimum support price” (MSP), directly into their bank accounts.
• It hence provides an alternative to physical procurement of commodities at MSP, which comes with the hassles of storage, transport and marketing. 
• The Problems - Only those farmers registered on its portal gets benefited. 
• Financial burden will be more than 90% of the state’s total agri-budget, rendering BBY unfeasible. 
• The Haryana government too has announced a somewhat similar scheme for vegetables but it does not even cover the full cost of production.

What is Telangana’s Scheme?

• The government of Telangana is piloting an "Input support scheme" modelled on the line of EU's "single payment scheme".
• The Structure - It involves paying Rs 4,000 per acre to every farmer twice a year for the kharif and rabi seasons.
• The payment is mainly to cover the cost of major farm inputs such as fertilisers, seeds and pesticides.
• It is also to relieve farmers from taking loans from moneylenders.
• This doesn’t require the farmer to register his cultivated area and the farmer isn’t constrained by crop choice or sale timelines.
• This model is crop-neutral, more equitable, more transparent, and gives farmers the freedom to choose.
• The Problems - It is being linked to land ownership. Thus it automatically leaves out tenant cultivators of such input supports provided.
• The payments are on a per-acre basis. Thus a sizeable share of the payment will go to undeserving large farmers and absentee landowners.
• There is no provision to ensure that the financial aid is actually utilised for purchasing farm inputs.
• Thus the programme needs modification to lend income support to those who are actually engaged in agricultural activities.

Source: Indian Express