Scheme for farmers to avert distress sales below MSP soon

UNDER THE SCHEME, STATES WILL BE FREE TO PROCURE CROPS FROM FARMERS FOR WHICH MSP IS ANNOUNCED

NEW DELHI: The central government, in consultation with states, proposes to launch a new price support scheme for farmers to prevent distress sales at prices below the minimum support price (MSP).

Under the proposed “market assurance 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 the public distribution system.

Under the new scheme, the centre will compensate states for any losses capped at 30% of the procurement cost. It will be the states’ responsibility to dispose of the procured crops.

The proposed scheme will ensure an assured price for the farmer, mitigating the price risks faced by farmers after harvest. Together with a prolonged spell of inadequate rains and two years of drought it has contributed towards rural distress.

If successful, it will also benefit the Bjp-led NDA.

However, it could place fiscal pressures on the Union government — in the just-concluded assembly election in Gujarat, one reason contributing to the Bharatiya Janata Party’s less than usual performance was farmer angst triggered by rural distress.

The system, as it exists now, under which only rice, wheat and small quantities of pulses and oilseeds are procured by the centre, “leaves much to be desired”, according to a copy of the proposal reviewed by Mint.