TS rejects Modi’s farmers scheme

Feels procuring crops at their risk will impose heavy burden on state governments

Telangana state is not in favour of the Centre’s new price support scheme for farmers to prevent distress sales.

Prime Minister Narendra Modi had recently mooted the idea of launching a new scheme ‘Market Assurance Scheme’ and sought the opinion of all states on implementing this from ensuing kharif season.

Under the new scheme, states will be free to procure all crops from farmers for which MSPs are announced, except rice and wheat, which are already being procured by the Centre for PDS.

The Centre will compensate states for any losses capped at 30 per cent of the procurement cost. It will be the states’ responsibility to dispose of the procured crops.

The TS government feels that it will impose heavy financial burden on state government if only 30 per cent is compensated and convey its opinion urging Centre to review the new scheme.

Officials brought this issue to the notice of Chief Minister K. Chandrasekhar Rao.

At present, the state governments are purchasing crops from farmers directly for MSP based on the approval given by the Centre.

The Centre has been announcing MSP for 23 types of crops. However, the states are purchasing only rice and wheat for MSP directly from the farmers, which are used in PDS.

For other crops, the states are purchasing for MSP based on prevailing market conditions, that too only if the Centre comes forward to sanction funds if prices crash below the MSP.

At present, the Centre has been releasing funds in advance to states to purchase crops for MSPs.

In the new system, the states themselves have to mobilise funds on their own to purchase crops for MSP and dispose the stocks on their own. In case, the price falls below MSP and state government suffers losses, the Centre agreed to compensation up to 30 per cent of losses.

This would mean that the governments had to allocated thousands of crores of rupees in the Budget every year for procurement of crops, which will be a tough task.

Moreover, it would be tough to estimate the price trend of various crops for the entire year and sanction funds accordingly.

Agriculture secretary C. Parthasarathy said, “Though the new scheme is good, there are practical problems involved in this. It would be tough for any state government to sanction huge amount of funds in Budget every year for procurment in the absence of clarity. The 30 per cent compensation norm will also create problems for state government.”