The government on Friday discussed various ways to implement the Minimum Support Price (MSP) for different agricultural crops in light of Finance Minister Arun Jaitley's budget announcement of fixing the MSP at 1.5 times the cost of production.
NITI Aayog Vice Chairman Rajiv Kumar held a consultation meeting over the issue with Minister of State for Agriculture Gajendra Singh Shekhawat which was also attended by officials of the Central and state governments.
During the meeting, three concepts were discussed to put in place a "fool-proof mechanism" for implementing the MSP.
"The first option related to Market Assurance Scheme, which proposes procurement by states and compensation of losses up to a certain extent of MSP after the procurement and price realisation out of sale of the procured produce," a NITI Aayog statement said.
It added that the second option related to price deficiency procurement scheme.
"Under this scheme, if the sale price is below a modal price then the farmers may be compensated to the difference between MSP and actual price subject to a ceiling which may not exceed 25 per cent of the MSP. No compensation would be due if modal price in neighbouring states is above the MSP," it said.
The third option related to Private Procurement and Stockist Scheme, which relates to procurement by private entrepreneurs at MSP and government providing some policy and tax incentives and a commission to such private entities.
It said that the commission and the tax incentives could be decided on the basis of some transparent criteria.
MOS Agriculture Gajendra Singh Shekhawat said more than one options may be adopted by the states depending upon their conditions.
However, all the three options may not be implemented for the same crop, he said.
In India, MSP for 24 agricultural commodities of Kharif and Rabi season are announced by the government based on the recommendations of the Commission for Agriculture Cost and Prices.
However, procurement by Central and state agencies is limited to rice and wheat and some amount of coarse cereals.
The government also procures limited quantity of oil seed and pulses through various agencies.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)