01/09/2020 - Government Policies

KEY POINTS

·         As per the Department of Administrative Reforms and Public Grievances’ (DARPG) latest report related to agriculture ministry, 46% grievances pertained to low crop prices received by farmers.

·         Different states have different levels of capabilities; some like Punjab and Haryana have historically been in a better position to procure major crops (paddy and wheat), while others like Bihar, Odisha and states in the east have limited capabilities to procure. Because of this Punjab and Haryana farmers receive higher prices than farmers in states like Bihar.

·         To correct the policy bias in procurement, the government started the Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) in 2018, to ensure that farmers growing pulses and oilseeds get MSP as promised.

·         It also takes care of differences in crops, state capabilities and local preferences and feasibilities, and gives flexibility to state governments to choose from different operational modalities to ensure MSP for each crop. PM-AASHA has three sub-schemes—price support scheme (PSS), price deficiency payment scheme (PDPS) and pilot of private procurement & stockist scheme (PPSS).

·         Under PM-AASHA, PSS is implemented for procurement of pulses, oilseeds and copra at MSP. Past experience shows that implementation of PSS is hindered by lack of awareness about MSP, procurement operations, lack of working capital with procurement agencies.

·         Under PPSS, private players can procure oilseeds at the state-mandated MSP during the notified period in select districts or APMC markets, for which they would be paid a service charge not exceeding 15% of the notified support price.

·         However, the most suitable mechanism for oilseeds is PDPS as they don’t require physical procurement by government agencies and depend on market signals and market players for buying at the ongoing market price.

·         PPSS is a non-starter in many states due to the limit imposed on service charges to be paid by the government to private procurement agencies, as 15% is uneconomical in procuring from scattered and thinly distributed oilseed production areas.

·         PDPS can take advantage of huge procurement, storage and distribution networks of private players like HUL in procuring, transporting, storing and disposing of oilseeds coupled with price deficiency payment to farmers using JAM. This also reduces the burden on the government, enhances market efficiency and is cost effective.

Pls review