Cabinet Committee of Union Govt. has approved Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM AASHA) Umbrella Scheme for farmers. PM AASHA Scheme includes Price Support Scheme (PSS), Price Deficiency Payment Scheme (PDPS) and Pilot of Private Procurement and Stocklist Scheme (PPSS). PM Aasha is another pro-farmer initiative which aims to ensure MSP for agricultural produce and compensate losses of farmers.
Pradhan Mantri Annadata Aay Sanrakshan Abhiyan is expected to provide benefits to the farmers for a long period of time. Central govt. focuses on increasing the annual income of the farmers and to realize the dream of “Doubling Farmers Income by 2022”. Earlier, central govt. has raised the MSP of all major crops to 1.5 times the previous cost.
This crop procurement scheme is a historic step towards ensuring that overall income of farmers gets increased as mentioned in Union Budget 2018-19.
PM AASHA – Pradhan Mantri Annadata Aay Sanrakshan Abhiyan
PM AASHA Umbrella scheme is launched to protect and augment income of the farmers. This scheme will augment farmer’s income through a 3 pronged approach:-
- Price Support Scheme (PSS) – Central Nodal Agencies along with State govt. will make physical procurement of pulses, oilseeds and copra. Govt. will bear procurement expenditure and losses caused due to procurement upto 25% of total production.
- Price Deficiency Payment Scheme (PDPS) – All oilseeds for which MSP has been notified would get covered under PDPS. Farmers will be able to get direct payment of difference between MSP and Selling Price.
- Pilot of Private Procurement and Stocklist Scheme (PPSS) – This scheme will involve participation of private sectors in procurement operation to be piloted. In case of oilseeds, states have a choice to roll out PM AASHA Scheme on a pilot basis in certain selected districts.
While addressing a press conference, Union Agriculture Minister Radha Mohan Singh said that PM-AASHA scheme is an unprecedented step towards Doubling Farmers’ Income. It is a major boost to pro-farmer initiative by the government.
PM Aasha – Complete Details
Already existing schemes of Department of Food and Public Distribution (DFPD) for procurement of paddy, wheat and nutri-cereals / coarse grains and of Ministry of Textile for cotton and jute will be continued. These crop procurement schemes of various departments will continue to providing MSP to farmers for these crops. Central and state govt. will continue to physically procure crops under Price Support Scheme (PSS).
All notified oilseeds whose MSP has been fixed by the govt. would be covered under PDPS. In case there is a difference between MSP and Selling Price, then farmers would receive the price difference.
Pilot phase of participation of private sector in procurement will be started. This pilot launch will help in understanding the benefits of private sector in crop procurement. So, govt. has launched Private Procurement Stockist Scheme (PPSS) on pilot basis in selected district / APMC(s) of district. It is similar to PSS, but here the commodities are purchased by private companies instead of public sector undertakings.
In Pilot Districts, PPSS will substitute PSS, PDPS. Selected private agency shall procure commodities at MSP in notified markets in notified period from registered farmers as per PPSS guidelines.
PM AASHA Guidelines – Farmers Can Sell 25 Quintal / Day & Get Relief from All Taxes (Update As on 22 October 2018)
An individual farmer will now be able to sell 25 quintals of agricultural produce per day and get relief from all taxes. This is in accordance with the new guidelines of the central govt. procurement plan for agriculture commodities. States which procure crops other than wheat and rice through Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) need to follow the new guidelines.
The maximum limit of 50 bags of 50 Kg each (25 quintals) per day has been introduced in order to ensure that a few big farmers does not takes away the entire scheme benefits. This move is going to provide relief to the farmers at a time when the prices of major kharif crops have fallen below their state mandated minimum support prices (MSP) for 2018-19.
Madhya Pradesh, Rajasthan and Chhattisgarh have already announced their mega procurement plans and Haryana govt. has also started procurement.
PM AASHA Guidelines – Sell 25 Quintal / Day
As per the guidelines, 2 components of PM-AASHA which includes price support scheme and price deficiency payment are modeled on the lines of MP Bhavantar Bhugtan Yojana. On a pilot basis, the total expenditure of central government would be limited to 25% of total oilseeds, pulses or coarse cereals production of the state. In case the state govt. wants more crops to be procured, then govt. can do it so from their own resources.
In the MP Bhavantar Yojana, farmers get a differential amount between the MSP and a pre-fixed rate, guidelines stated that such a payout must not exceed 25% of MSP of crop. This implies that for soyabean crop, difference payment would not be more than Rs. 850 per quintal irrespective of price fall in 2018-19.
Under the price support scheme, in case a state govt. wants the Center to procure pulses, oilseeds and coarse cereals over the compulsory limit of 25% then the state will have to bear the expenses. But in case the commodity is to be purchased for the public distribution system (PDS), then the support of central govt. could extend to 40% of production. Moreover, farmers needs to be given remuneration in a given time frame.
Under price deficit payment scheme, farmers have to be paid within 1 month of the sale of their produce. Under the price support scheme, the remuneration amount must reach the farmers within 3 days of receipt of their produce. In the pilots under private procurement and stockiest scheme (PPSS), payment has to be made in a stipulated time duration. Delayed payment is one of the serious concern and complaint of the farmers.
PM-AASHA Guidelines for Procurement of Crops
The new guidelines as specified for procurement of crops under PM AASHA scheme are as follows:-
- Central govt. support in case of deficit financing or direct procurement is limited to 25% of states production.
- States will have to bear any expenses over and above the mandated 25%.
- Farmers need to be paid within 3 days in case of direct procurement and 1 month for deficit financing.
- Central agencies like Nafed will be 100% reimbursed in case of loss in procurement and disposal.
Since private participation has not gathered pace, so state govt. are keen on implementing either the price deficiency payment scheme or get central govt. help for their price support scheme. For pilot of private sector participation in procurement schemes which is to be conducted in 8 centres across the country, state govt. will ase stockholding norms for smoother operation.
Moreover to prevent round tripping, private entities cannot sell their produce in the market within the procurement months. To carry forward the procurement operations, govt. has allocated Rs. 150 billion over the next 2 financial years and out of this amount, 62 billion would be spent in 2018-19.
Price Deficiency Payment (PDP) Scheme for Oilseeds Farmers to Ensure MSP (9 September 2018)
Central govt. is making plans to introduce a new Price Deficiency Payment (PDP) Scheme for Oilseeds Farmers. Under this scheme, oilseeds farmers will get compensation if the rates falls below Minimum Support Price (MSP). Govt. plans this scheme to reduce dependence on imports of cooking oils and raise productions of Edible Oils. As per the cabinet note of Agriculture Ministry, Price Deficiency Payment method would be followed similar to MP Bhavantar Bhugtan Yojana.
Under scheme for oilseeds farmers, govt. will pay difference b/w MSP and Monthly average price of oilseeds as quoted in major wholesale markets. Around 70% of domestic demands is fulfilled from imports of edible oils and currently 14 to 15 million ton of edible oils is imported per year.
In Union Budget 2018-19, Arun Jaitley announced that a full-proof mechanism will be put forward to ensure MSP to farmers. The total outlay of this PDP Scheme for Oilseeds Farmers is around Rs. 10,000 crore.
Price Deficiency Payment (PDP) Scheme for Oilseeds Farmers
Now Union Agriculture Ministry and states are in consultation to formulate new mechanism to ensure MSP for edible oils (cooking oils). As per the recommendations, cabinet note is now issued which proposes implementation of Price Deficit Payment (PDP) Scheme only for oilseeds. All the states would be given option to choose either PDP Scheme or existing Price Support Scheme (PSS).
New PDP Scheme is expected to raise the production of oilseeds to about 25% in the state. Under existing PSS Scheme, central agencies procure commodities / products which are covered under MSP policy whenever the prices falls below MSP.
Food Corporation of India (FCI) is the govt’s nodal agency for procurement and distribution of foodgrains. FCI has already procured wheat and rice at MSP to supply subsidized ration at PDS outlets. Central govt. is also implementing Market Intervention Scheme (MIS) to procure products which are perishable and not covered under MSP policy.
Under MSP policy, central govt. has fixed rates for 23 notified crops which are grown in kharif and rabi seasons. MP, Rajasthan, Gujarat are major oilseeds growing states in the country. The total production of oilseeds during 2017-18 is expected at around 31.31 million tonnes. The oilseeds production stands at around 31.28 million tonnes during 2016-17.
New Crop Procurement Scheme for Farmers to ensure Minimum Support Price (Update on 4 April 2018)
Central govt. is planning to launch a new Crop Procurement Scheme to ensure minimum support price of all 23 crops to farmers. Under this support price mechanism, crops like groundnut, soyabean, ragi, maize, bajra and jowar will get MSP. For this scheme there are 3 proposals – Market Assurance Scheme (MAS), Price Deficiency Payment System (PDPS) and Involving Private agencies to procure crops at MSP.
Previously only wheat and paddy gets the attention of central government. Moreover procurement of pulses, oilseeds and cotton is carried out under Price Support Scheme (PSS). PSS is unable to provide relief to farmers and also inefficient to ensure MSP for majority of 23 crops. This new scheme will ensure MSP for all 23 notified crops.
MSP implementation requires combined efforts and cost sharing between states and central govt. So, govt. has prepared an institutional mechanism to implement support price system across India.
Crop Procurement Scheme
Central govt. has already prepared the mechanism and is going to discuss it in the cabinet meeting on 4 April 2018. This new scheme involves 3 mechanisms which are described as follows:-
- Market Assurance Scheme (MAS)
- This scheme involves decentralized procurement of crops i.e purchase and disposal of crops by state agencies. Under MAS, central govt. will provide 100% compensation to state govt. if the loss in procurement and other operations is upto 25% of MSP value of crop. If loss in procurement is between 25% to 30% of MSP value, then Centre and States share of compensation is in the ratio of 60:40.
- Moreover if procurement loss is 30% to 40% MSP Value then burden will get shared in 50:50 ratio. If price loss is upto 15% then total expenditure will be 40,331 crore while it will increase to 53,775 crore if loss is upto 25%. For more details on MAS, click – Market Assurance Scheme for Price Support
- Price Deficiency Payment Scheme (PDPS)
- This scheme provides compensation to the farmers as per the MSP rates. In PDPS Scheme, if MSP loss value is 15% then cost will remain Rs. 22,584 crore while it will rise to Rs. 36,300 crore if MSP loss value is 25%.
- PDPS Scheme is similar to Bhavantar Bhugtan Scheme of Madhya Pradesh govt. where farmers get price deficit.
- Private Agencies Involvement – Central Govt. will involve private agencies to procure crops at MSP.
Most of the states favours MAS but states are free to choose PDPS and also involve private agencies for procurement. Market Assurance Scheme will replace Private Support Scheme (PSS) and will cover all 23 crops. Through MAS, state govt. can directly procure farmers produce and credit MSP directly into their bank accounts. Central govt. will bear cost of expenditure (max. 15%).
Cabinet committee will decide the extent of support to the loss and overall sharing of costs. Bihar, Gujarat, Haryana, Jharkhand, Karnataka, Rajasthan, Uttarakhand, Tamil Nadu favours MAS while Madhya Pradesh favors PDPS. Central govt. will provide opportunity to the state govt. to opt either of the 2 schemes or both depending on their choice of crops.
Market Assurance Scheme for Rural Farmers to Provide Price Support for Crops (Update on 27 December 2017)
Central government is going to launch Market Assurance Scheme for farmers. Subsequently, govt. will provide price support to prevent distress sales of crops below the Minimum Support Price (MSP). Under this sarkari yojana, the state govt. will get the authority to procure all crops whose MSP are announced. Central govt. will provide compensation of 30% to the state govt. for their losses in the procurement of crops.
This scheme will not allow the state govt. to procure rice and wheat which is already procured by the Central govt. for Public Distribution System (PDS). Moreover, the state govt. will have the responsibility to dispose off their procured crops. Central govt. is planning to launch New Crop Procurement Scheme as soon as possible.
This price support scheme will help the rural farmers to get at-least their MSP for crops in case the prices of the commodity falls. Furthermore, this scheme will strengthen the procurement process of crops and will further ensure that farmers are not going to suffer due to market inefficiencies.
Market Assurance Scheme
The important features and highlights of this scheme are as follows:-
- State govt. are free to procure all crops (excluding wheat and rice) when the wholesale prices falls below MSP.
- This price support scheme will benefit rural farmers and prevent their distress sales.
- Subsequently, state govt. will have the authority to decide which crop they should procure and in which quantities. This scheme will also tackle the problems of improper functioning of agricultural markets.
- Moreover, state govt. will have the ownership rights to use these crops wherever they want. They can use it in mid day meals to provide nutritious food to the children ore even can sell these crops in an open market.
- In addition to this, Central govt. will compensate states up to 30% for their procurement losses.
- Furthermore, this scheme will improve the agricultural marketing system to provide MSP to the farmers.
Need for Market Assurance Scheme
Central govt. proposes this scheme after the record production of various crops (cereals and pulses) in 2016-17 which has led to the trashing of the wholesale prices below MSP. Moreover, lack of competition, un-ordered price discovery and lack of cartels (organizations to limit competition) are major causes of price distortion. So the farmers are helpless in selling their crops at great losses. Accordingly, farmers demands for their sustainable crop prices and loan waivers.
Some states like Uttar Pradesh, Maharashtra, Punjab and Karnataka has started Farm Loan waivers and Madhya Pradesh has launched its own price support scheme (Bhavantar Bhugtan) to help farmers. However, this scheme of Central government will help all the farmers to a great extent across the country.