Just hope will not do: India's farmers need much more than PM-Aasha

Belying the government’s expectations, its three-pronged mega plan to provide the steeply-hiked minimum support prices (MSPs) for crops has evoked a lukewarm response from both farmers and states. This is not surprising even though the government has given it an imaginatively chosen and hope-inspiring name of Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-Aasha) — meaning farmers’ income protection drive. Of the three mechanisms mooted under this umbrella agri-marketing package — the price support scheme, the price deficiency payment scheme, and the private procurement and stocking scheme — the first two are already being implemented in some states, benefiting only a fraction of farmers. The third one, aimed at roping in the private trade in procurement operations, a novel and well-judged concept, is to be tried out only on a pilot basis. Notably, these schemes are meant to be operated through the existing mandis run by the Agricultural Produce Marketing Committees. These would, therefore, run the risk of carrying their baggage of inherent deficiencies and trading malpractices.

 
So, while the farmers view the PM-Aasha as old wine in new bottles, the state governments consider it financially burdensome. The additional budgetary allocation for the PM-Aasha is Rs 150 billion, which is too meagre compared to the magnitude of the task, especially if the entire marketable surplus of the MSP-notified crops is to be covered. The states may also find it hard to implement it from the current kharif marketing season, which begins in a couple of weeks, for the paucity of time to do the necessary pre-launch spadework. After all, the PM-Aasha is in addition to the ongoing open-ended procurement systems for cereals (rice, wheat and coarse grains), cotton and few others in which the state agencies are also involved.

The price support scheme, the first component of the PM-Aasha, is already being run for decades in some areas by parastatals such as the National Agricultural Cooperative Marketing Federation of India Ltd (Nafed) and state marketing federations for pulses, oilseeds and other specified crops. Its main bane is the limited resource availability and belated reimbursement of losses by the Centre. Though the PM-Aasha proposes to raise direct and indirect funding support to Nafed to Rs 450 billion, that, too, seems inadequate to extend its coverage any further. The second mechanism — the price deficiency payment scheme — has been noticed to have some loopholes, which are being exploited by traders. Besides, the farmers are unhappy with this system because of delayed payment of the price differential. However, these are essentially operational glitches which can and, in fact, should be sorted out to ensure the success of this otherwise good scheme.

 
The third component of the PM-Aasha concerning private involvement, though well-intended, is also not free of flaws. Under this, registered private entities are supposed to buy the selected commodities at the MSPs and undertake the post-procurement handling, storage and disposal of the stocks. For this, they are offered service charges, which are capped at just 15 per cent of the MSP of the particular crop. This commission, obviously, is too little to woo them to join this scheme. Thus, unless these issues are suitably addressed and, more importantly, the infrastructural and financial aspects are adequately taken care of, it is futile to expect the PM-Aasha to succeed in ensuring remunerative prices to all farmers.