Procurement: A much-used tool to further the interests of political parties

One govt after another has been reaching out to the farmer just ahead of crucial polls, offering remunerative prices for his crops in a bid to score electoral victories

Even as farmers across the country have been protesting to safeguard the MSP-based procurement mechanism for wheat and rice which they fear will whittle down with the introduction of the three agriculture acts, the ruling BJP said in its manifesto for the Bihar elections that its government will soon start procuring pulses from the state.

While it remains to be seen to what extent that promise will be fulfilled in the coming years, the announcement once again shows how procurement has been used by various political parties as a tool to foster their political ambitions.

This is particularly true of crops such as oilseeds, pulses and coarse cereals, which fall outside the ambit of mainstream wheat and rice procurement.

PM-ASHAA

A few months before the 2019 elections, as prices of several crops dropped much below their minimum support prices, the Central government launched an ambitious scheme to procure a portion of oilseeds, pulses and coarse cereals from farmers if their prices fell below the MSP.

The procurement was to be done on a request from the state government and the purchases were to be capped at 25 per cent of the total production of the said crop in the state, but could be expanded up to 40 per cent if the commodity was used for PDS (public distribution scheme) or for any other state welfare scheme.

A sum of Rs 15,000 crore was sanctioned for the scheme, spread over two years starting 2018-19, of which Rs 62 billion was to be spent in 2018-19.

That apart, procurement agencies like Nafed were given a bank guarantee of over Rs 16,000 crore in addition to the existing Rs 29,000 crore guarantee.

The guidelines of the scheme capped the sale by individual farmers at 25 quintals a day. It also said that no state could levy any cess such as mandi tax on such procurement.

The guidelines for Pradhan Mantri Annadaata Aay Sanrakshan Abhiyan (PM-AASHA), loosely translated as Prime Minister’s Farmers Income Guarantee Campaign, applies to states that want to procure crops other than wheat and rice under PM-ASHAA.

According to the guidelines, in all the three components of PM-AASHA, Central expenditure would be limited to 25 per cent of the state’s total production of oilseeds, pulses or coarse cereals. The state would have to arrange funds from its own resources if it wanted to procure or extend support over and above the mandated 25 per cent. The three components of PM-AASHA include the Price Support Scheme (PSS), Price Deficiency Payment Scheme (PDPS) which is modelled along the lines of Madhya Pradesh’s Bhawantar Bhugtan Yojana, and Private Procurement and Stockist Scheme on a pilot basis. 

Even in the case of Bhawantar, where farmers get paid the gap between the Minimum Support Price and a pre-fixed modal rate, the guidelines state that such payouts to farmers should not exceed 25 per cent of the MSP value of the crop for which support is being provided.

Under the Price Support Scheme (PSS), if any state wants any of the Central agencies to procure pulses, oilseeds and coarse cereals over and above the mandated 25 per cent, the states themselves will have to bear the expenditure for such procurement.

However, Central support can expand up to 40 per cent of the season’s production, provided that the commodity is used for PDS or other such welfare schemes at the state’s own cost.

The third key guideline of PM-ASHAA is that farmers, will have to be paid their remuneration within a fixed time period, regardless of the scheme they come under.

For example, in the case of PDPS which is modelled on the lines of Madhya Pradesh’s Bhawantar Bhugtan Yojana, farmers have to necessarily be paid within a month of the sale of their produce in notified mandis, in their respective bank accounts. Under PSS, the purchase price should reach farmers within three days of receipt of their produce.

As the September 10 cabinet decision stated, under PM-ASHAA, the existing PSS would be open for pulses, oilseeds and coarse cereals, while the remaining two components will only be for oilseed crops.

However, reports show that in 2019-20, just about four per cent of the sanctioned scheme for oilseeds and pulses were procured under the scheme in that year.

Politics of procurement

Just before the crucial state polls in Madhya Pradesh, Rajasthan and Chhattisgarh in 2018, the state governments along with the Centre had stepped up the procurement of kharif crops through higher financial allocation.

The Madhya Pradesh government announced in a notification, that it will spend almost Rs 6,500 crore either tp directly purchase oilseeds and pulses from farmers or pay the price gap between a modal rate and the MSP under its Bhawantar Bhugtan Yojana before the polls.

State officials said that of the 4.5 million farmers growing oilseeds and pulses in the state, around 60 per cent or 2.6 million have registered under both the programmes, and around 4.2 million tonnes of pulses and oilseeds, including soybean and maize, were to be purchased in the next few months.

That apart, the Cotton Corporation of India (CCI) stepped up its purchase from about 175,000 MP farmers that year.

Just before the polls, neighboring Rajasthan decided to buy 750,000 tonnes of groundnut and soybean at a cost of over Rs 3,100 crore.

In Chhattisgarh, the then Raman Singh government upped its procurement of kharif rice, for which it also declared a special incentive of Rs 300 per quintal over and above the MSP for kharif 2018-19.

Though all the three lost their respective state polls that year, it didn’t stop the states from using procurement as a tool to meet their political goals.

Earlier this year, the new Madhya Pradesh government procured as much as 12.9 million tonnes of wheat from farmers in the 2020-21 season, just ahead of the state assembly by-elections, which was critical for the government's survival.

In the process it pumped Rs 25,000 crore into its rural economy and surpassed Punjab to become the country’s largest wheat procurer this year.

The result: the ruling BJP comfortably won 19 of the 28 assembly by-elections held this November and saved its government.