Spend on agri schemes highest in 6 years

Centre spent over Rs 71 billion on existing farm market intervention schemes in FY18

As the Centre contemplates measures to give the freedom to states to intervene in agricultural markets if there is a price fall, including adopting Madhya Pradesh’s Price Deficiency Payment Scheme, the data shows that the government has spent more than Rs 71 billion on the existing market schemes till the middle of December, and that is among the highest in the past five-six years.

The Centre runs two programmes — Market Intervention Scheme (MIS) and Price Support Scheme (PSS) — to assist states to procure agricultural commodities if there is a price fall.

 

While the PSS is for procuring mostly oilseeds and pulses, through the MIS states receive help to procure perishable items like onions and potatoes.

The Central government bears 50 per cent of the expenditure under both the programmes, and the states contribute the rest. 

Apart from this, a Price Stabilisation Fund (PSF) is operated by the Union ministry of consumer affairs and under it states are compensated for intervening in agricultural markets in the event of a price fall.

In 2017-18, the data shows that till December 18 the Central government spent around Rs 13.87 billion from its kitty to help states procure over 920,000 tonnes of onions, potatoes, red chillies, and garlic under the MIS. This was the highest amount ever allocated by the government under the scheme in the last six years starting from 2011-12.

Similarly, under the PSS, the Centre, along with states, procured 1.2 million tonnes of oilseeds and pulses, spending around Rs 57.43 billion so far as its share, and this too was by far the highest spend on the scheme since 2012-13. Through this, around 700,000 tonnes of oilseeds and 500,000 tonnes of pulses have been procured.

However, a complaint against the two programmes is that as a share of the funds is borne by the Central government, requests from states take long to process, resulting in delay in giving remunerative prices to farmers.

Also, many a time the quantity to be procured is capped, which does not help farmers. Therefore, a programme which would give states the freedom to procure, store, and distribute agricultural commodities in the event of a price fall could be devised and the Centre just shares a portion of the financial burden.

The market assurance scheme, which is being discussed, tries to do that and the Centre bears the expenditure, which is capped at 30 per cent of the procurement cost of the price fall below the MSP.

Whether the new scheme is in addition to the MIS, PSS, and PSF or subsumes all of them remains to be seen.

The second option being discussed is the Centre participating in ‘Price Deficiency Payment’ schemes (Bhavaantar Bhugtan Yojana and Bhavantaar Bharpai Yojana) on the lines of Madhya Pradesh and Haryana.