MP’s Price Deficit Scheme’s budget swells, amid low response

State plans to enrol 2 mn oilseed, pulses farmers; till Thursday, less than a million had joined

Though just a little over 0.9 million farmers had registered for the much talked about ‘Price Deficit Finance Scheme’ of the Madhya Pradesh government till Thursday, officials in the state are confident at least two million of the five million oilseeds and pulses farmers will enrol by the time registration closes on October 15.

The overall target itself has come in for strong criticism for being too low, given that almost five million farmers in the state cultivate oilseeds, pulses and maize.

Madhya Pradesh had budgeted spending around ~2,000-3,000 crore on the programme based on its initial price calculations, but the sharp 25-30 per cent drop in kharif pulses and maize prices since October has upset its calculations.

It now plans to spend at least ~4,000 crore on the programme based on a rough calculation of transferring a minimum ~1,000 per quintal into the bank accounts of all the two million farmers who register.

“As of today, the calculations are based on prices prevailing in October, but the total financial outgo might go up if prices drop further,” Rajesh Rajora, principal secretary in the department of agriculture, told Business Standard.

Madhya Pradesh has approached the Centre for sharing the cost of the programme, and the latter has agreed to bear half the expenses.

Registration for the programme was to end on October 11 but was extended by a few days, as the scheme took time to become noticed, forcing worried state officials to embark on a massive awareness campaign.

Special Gram Sabhas were organised in 30,000 panchayats across the state where farmers were physically enrolled in the programme.

“The low level of registrations for the programme so far shows how poorly farmers have responded to the scheme as there are a lot of problems related to the programme,” Kedar Sirohi, founder-member of Aam Kisan Union, a non-political farmers’ organisation, said.

Sirohi was on the forefront of the farmers’ agitation, which gripped the state in June this year, leading to the killing of six peasants in Mandsaur.

“For a pilot scheme, we believe that it is a good enough response,” Rajora countered.

Officials, meanwhile, counter the allegation of low response, saying that of the two million oilseeds and pulses farmers whom the state plans to enroll for the scheme, around 1.2 million will come on board online, while the remaining will be enrolled physically.

“Madhya Pradesh has around 7.5 million farmers who cultivate during the kharif season, of which around 1.5 million are engaged in paddy cultivation, which has been kept out of the scheme’s purview. Of the remaining five-six million farmers, nearly half grow soybean, while the rest grow moong, urad, cotton and other oilseeds and pulses, and are eligible to register for the scheme,” Rajora said.

The Chief Minister’s Price Deficit Financing Scheme (Mukhyamantri Bhawantar Bhugtan Yojana) was approved by the state cabinet in August to provide a cushion to farmers, who had been agitating for months against falling prices of their produce.

The state administration then had decided to purchase surplus onion and pulses from farmers to provide immediate relief. However, with limited storage capacity, questions were raised on the government’s ability to manage the huge stocks.

In 2016, around 73 per cent of the one million quintals of onion purchased by the Madhya Pradesh government from farmers spoiled due to inadequate storage space and the state spent ~2.88 crore just to destroy the surplus stock.

The Price Deficit Scheme as of now covers eight oilseeds and pulses, whose production in 2017 is estimated to be around 14.25 million tonnes. These include soybean, maize, tur, moong, urad and groundnut.

Farmers will be compensated if the price of a notified crop falls below the MSP, within a two-month sale window starting from October 16.

But the compensation will be capped at a predetermined modal price. No payment will be made to unregistered farmers and also those who sell their produce outside the scheme window.

The modal price will be the average market prices for a particular commodity over a two-month period in Madhya Pradesh and two other states where the crop is grown and traded.

“It remains to be seen on what basis the modal price is calculated. Also limiting the sale window to just two months could encourage forced sales,” Sirohi said.

G S Kaushal, a former director of agriculture in Madhya Pradesh, questioned the need for such a scheme when the country is not self-sufficient in oilseeds and pulses and has to import these commodities every year.