PR ADHA N MANTR I AN N A DAT A AAY SANR AK SHAN A BHI Y AN (PM - AASHA)
Why in News?
Recently, the Union Cabinet approved a new umbrella scheme – ‘Pradhan Mantri Annadata Aay SanraksHan
Abhiyan’ (PM-AASHA).
Background
• Minimum Support Price (MSP) system suffers from various shortfalls such as limited geographical reach and crop coverage (for instance it excludes oilseeds). It works well only where there was direct procurement by industries. Also, prices of key agricultural commodities have fallen below their MSP due to which there is increasing farmer unrest across the country.
• PM-AASHA scheme thus aims to plug the gaps in procurement system, address issues in MSP system and give better returns to farmers.
34 Vision IAS
About the scheme
It has three components complementing the existing schemes of the Department of Food and Public Distribution for procurement of paddy, wheat and other cereals and coarse grains where procurement takes place at MSP:
• Price Support Scheme (PSS): Under this, physical procurement of pulses, oilseeds and copra will be done by Central Nodal Agencies. Besides National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), FCI will also take up procurement of crops under PSS. The expenditure and losses due to procurement would be borne by the Centre.
• Price Deficiency Payment Scheme (PDPS): This will cover all oilseeds for which MSP is notified and Centre will pay the difference between the MSP and actual selling/ model price to the farmer directly into his bank account. Farmers who sell their crops in recognized mandis within the notified period can benefit from it.
• Pilot of Private Procurement and Stockiest Scheme (PPSS): In the case of oilseeds, the States will have the option to roll out PPSS in select districts where 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 of the crop.
Significance of the Scheme
• An innovative MSP-plus approach to the problem of non-remunerative prices: The three different components of the scheme will cover gaps in the procurement and compensation mechanism for crops, thus ensuring remunerative prices for farmers and help reviving rural economy.
• Ensure crop diversification and reduce stress on soil and water: Unlike the current system where farmers repeatedly go for the few crops, such as paddy, wheat and sugarcane, the new scheme would ensure crop diversification and reduce stress on soil and water.
• Savings for the Centre: Under the current physical procurement, government agencies end up stockpiling food grains leading to high storage costs and significant wastage and leakages. This would be addressed in the new scheme.
• Better translation of increased MSP to farmer’s income: Government has recently increased the MSP of Kharif crops by following the principle of 1.5 times the cost of production, which will get translated to increased farmer’s income by way of robust procurement mechanism in coordination with State Governments.
• Increased financial provisions: the centre has made a provision of Rs. 16,550 Crore as a bank guarantee for central agencies to directly procure from farmers under PSS, while budgetary allocations for PM -AASHA has been raised to Rs. 15,053 Crore.
• It is a significant step towards enhancing productivity, reducing the cost of cultivation and strengthening post harvesting management, including market structure.
Challenges
• Agricultural markets must function transparently and government must take steps to break the traders’ cartel: Experience of Madhya Pradesh which implemented the PDPS under Bhavantar Bhugtaan Yojana revealed that the 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.
• Small and marginal farmers face double burden of lowered price and no compensation: Many small and marginal farmers were unable to sell their produce under Bhavantar scheme due to double burden of lowered price and no compensation. Government must come up with mechanisms to provide income transfer to farmers.
• Providing funds for PSS would be a key challenge for Centre as State Governments consider it financially burdensome. If all states apply to NAFED/FCI for procurement of oilseeds or pulses, the agencies would fall short of funds.
• Only 25% of the marketable surplus would be procured under the scheme: Instead of just 25% procurement, the Commission for Agricultural Costs and Prices (CACP) must be redesigned and renamed to ‘Commission for Farmers’ income and Welfare’ with a mandate to work out the minimum living income for a family and clearly defining means to provide it.
• Warehousing and storage infrastructure shortage not addressed: Many States such as Bihar, Jharkhand, West
Bengal and almost entire North-East are unlikely to procure a substantial quantity of paddy at MSP due to
35 Vision IAS
weak financial resources and infrastructure constraints of the organizations responsible for paddy procurement.
• States would also find it hard to implement the scheme from the current Kharif marketing season which begins soon.
Way Forward
• E-NAM and inter-market competition must be promoted: Centre must break the trader lobbies by widening the competition by inter-linking mandis, and States must proactively undertake regulatory reforms. Also, a robust pro-farmer export policy must be considered. Simultaneously, market reforms including Model Agricultural Produce and Livestock Marketing Act, 2017 and Model Contract Farming and Services Act, 2018 should also be replicated by all the State Governments.
• Successful implementation and effective private participation is the key to overall success of the scheme.
Guidelines for private participation in consultation with state governments must be formed.
Why in News?
Recently, the Union Cabinet approved a new umbrella scheme – ‘Pradhan Mantri Annadata Aay SanraksHan
Abhiyan’ (PM-AASHA).
Background
• Minimum Support Price (MSP) system suffers from various shortfalls such as limited geographical reach and crop coverage (for instance it excludes oilseeds). It works well only where there was direct procurement by industries. Also, prices of key agricultural commodities have fallen below their MSP due to which there is increasing farmer unrest across the country.
• PM-AASHA scheme thus aims to plug the gaps in procurement system, address issues in MSP system and give better returns to farmers.
34 Vision IAS
About the scheme
It has three components complementing the existing schemes of the Department of Food and Public Distribution for procurement of paddy, wheat and other cereals and coarse grains where procurement takes place at MSP:
• Price Support Scheme (PSS): Under this, physical procurement of pulses, oilseeds and copra will be done by Central Nodal Agencies. Besides National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), FCI will also take up procurement of crops under PSS. The expenditure and losses due to procurement would be borne by the Centre.
• Price Deficiency Payment Scheme (PDPS): This will cover all oilseeds for which MSP is notified and Centre will pay the difference between the MSP and actual selling/ model price to the farmer directly into his bank account. Farmers who sell their crops in recognized mandis within the notified period can benefit from it.
• Pilot of Private Procurement and Stockiest Scheme (PPSS): In the case of oilseeds, the States will have the option to roll out PPSS in select districts where 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 of the crop.
Significance of the Scheme
• An innovative MSP-plus approach to the problem of non-remunerative prices: The three different components of the scheme will cover gaps in the procurement and compensation mechanism for crops, thus ensuring remunerative prices for farmers and help reviving rural economy.
• Ensure crop diversification and reduce stress on soil and water: Unlike the current system where farmers repeatedly go for the few crops, such as paddy, wheat and sugarcane, the new scheme would ensure crop diversification and reduce stress on soil and water.
• Savings for the Centre: Under the current physical procurement, government agencies end up stockpiling food grains leading to high storage costs and significant wastage and leakages. This would be addressed in the new scheme.
• Better translation of increased MSP to farmer’s income: Government has recently increased the MSP of Kharif crops by following the principle of 1.5 times the cost of production, which will get translated to increased farmer’s income by way of robust procurement mechanism in coordination with State Governments.
• Increased financial provisions: the centre has made a provision of Rs. 16,550 Crore as a bank guarantee for central agencies to directly procure from farmers under PSS, while budgetary allocations for PM -AASHA has been raised to Rs. 15,053 Crore.
• It is a significant step towards enhancing productivity, reducing the cost of cultivation and strengthening post harvesting management, including market structure.
Challenges
• Agricultural markets must function transparently and government must take steps to break the traders’ cartel: Experience of Madhya Pradesh which implemented the PDPS under Bhavantar Bhugtaan Yojana revealed that the 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.
• Small and marginal farmers face double burden of lowered price and no compensation: Many small and marginal farmers were unable to sell their produce under Bhavantar scheme due to double burden of lowered price and no compensation. Government must come up with mechanisms to provide income transfer to farmers.
• Providing funds for PSS would be a key challenge for Centre as State Governments consider it financially burdensome. If all states apply to NAFED/FCI for procurement of oilseeds or pulses, the agencies would fall short of funds.
• Only 25% of the marketable surplus would be procured under the scheme: Instead of just 25% procurement, the Commission for Agricultural Costs and Prices (CACP) must be redesigned and renamed to ‘Commission for Farmers’ income and Welfare’ with a mandate to work out the minimum living income for a family and clearly defining means to provide it.
• Warehousing and storage infrastructure shortage not addressed: Many States such as Bihar, Jharkhand, West
Bengal and almost entire North-East are unlikely to procure a substantial quantity of paddy at MSP due to
35 Vision IAS
weak financial resources and infrastructure constraints of the organizations responsible for paddy procurement.
• States would also find it hard to implement the scheme from the current Kharif marketing season which begins soon.
Way Forward
• E-NAM and inter-market competition must be promoted: Centre must break the trader lobbies by widening the competition by inter-linking mandis, and States must proactively undertake regulatory reforms. Also, a robust pro-farmer export policy must be considered. Simultaneously, market reforms including Model Agricultural Produce and Livestock Marketing Act, 2017 and Model Contract Farming and Services Act, 2018 should also be replicated by all the State Governments.
• Successful implementation and effective private participation is the key to overall success of the scheme.
Guidelines for private participation in consultation with state governments must be formed.
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