MSP: DIRECT TRANSFERS
Faced with pressure from the Centre, Punjab is moving towards direct benefit transfer (DBT) to farmers for grain procured for the national granary this season. Fifteen other states that procure grain and other agricultural produce for central agencies, too, have started paying farmers directly or have agreed in principle to do so. This replaces the age-old system of paying farmers through ‘arthiyas’ or procurement agents.
Arthiyas facilitate trade in APMC (Agricultural Produce Marketing Committee) mandis for a fee. In Punjab, the total market charges for trade in agricultural produce is about 9.5 per cent of the crop value, including the 2.5 per cent commission paid to arthiyas. The state’s farmer unions, which are agitating against the new central farm laws, want the arthiya system to continue.
Amid pressure from the Centre, Haryana’s Manohar Lal Khattar government launched the DBT system on April 1, but the Amarinder Singh regime in Punjab was dithering for fear of annoying the farmer unions and arthiyas. On April 8, Union consumer affairs, food and public distribution minister Piyush Goyal, in his meeting with Punjab food minister Bharat Bhushan Ashu and finance minister Manpreet Badal, refused to make further allowances, forcing the state to switch to the
DBT model. Punjab’s Arthiya Association threatened to boycott wheat procurement during the rabi marketing season, beginning April 10, though many agents came around after assurances from Amarinder. The situation is less complex in Haryana. The FCI (Food Corporation of India), till now, directly transferred payments to the bank accounts of some of the state’s farmers. This year, MSP (minimum support price) will be credited to the accounts of all farmers selling produce to the FCI. For procurement of mustard, bajra and other crops for their own granaries, Haryana’s agencies paid MSP to farmers partly into their bank accounts and partly through arthiyas.
Punjab officials say last season’s database of 1.2 million farmers in the Punjab Anaaj Kharid Portal will be used to make the DBT transfers. Punjab and Haryana get a cash credit limit (CCL) from the Reserve Bank of India (RBI) and make payments on the Centre’s behalf, which include a commission to the arthiyas. On April 6, the RBI cleared Rs 21,658 crore towards CCL for procurement of wheat in Punjab during the ensuing season. The Centre aims to procure 13.3 million tonnes of wheat at an MSP of Rs 1,975 per quintal, Rs 50 more than last year.
Union food ministry officials say when stocks are procured on the Centre’s behalf, state agencies are technically part of the value chain and must make full direct payment to all stakeholders in the chain, including farmers and arthiyas. Some Union ministers believe most farmer unions are funded by wealthy arthiyas, who fear that the new farm laws will attract private capital and end their virtual monopoly on farm produce. Senior BJP leaders in Delhi argue that small and marginal farmers in Haryana and Punjab welcome DBT, and that DBT has been a longstanding demand of several farmer unions.
Agriculture economists like Tajamul Haque say APMC monopoly denies farmers of both states the benefits of competition, which could ensure better prices for their produce. Umendra Dutt, executive director of the Kheti Virasat Mission (KVM), Punjab, adds that this forces farmers to stick to MSP-assured crops such as paddy and wheat. This line of reasoning goes that the farm laws will remove all extra charges in agricultural trade, leading to better price realisation for farmers. However, the DBT plan seems contrary to the Union home minister Amit Shah’s written assurance to the agitating farmers that these charges will be retained; it’s another matter that the farmers, pressing for a repeal of the new laws, had rejected his offer. The opposition Aam Aadmi Party (AAP) and Shiromani Akali Dal (SAD) have accused the Amarinder government of keeping farmers and arthiyas in the dark on the DBT move, but officials in Goyal’s ministry deny any move to bypass the arthiyas.
The Centre has been pushing for direct payment to farmers since 2012. While most states have fallen in with the proposal, Punjab and Haryana’s arthiyas have been up in arms, forcing their state governments to take a cautious line. Last season, a strike by arthiyas forced Haryana to put DBT transfers on hold while Punjab deferred it citing the pandemic.
DBT threatens to alter the age-old ties between arthiyas and farmers. “The arthiyas extend soft loans to help farmers tide over capital shortages, and it would be next to impossible for banks to fill in for them,” feels Kultar S. Sandhwan, AAP MLA from Kotkapura, Punjab. Under the old system, states paid MSP and commission to the arthiyas, who then paid off the farmers after deducting advances they had extended. It was mandatory for arthiyas to clear payments within 48 hours of receiving them. For the farmer, who does not have easy access to cheaper loans from banks, the arthiya is an informal lender—and, by that token, a lifeline. The arthiya lives off this dependence, and often charges usurious rates of interest (15-24 per cent) on his advances. On paper, banks charge much less (say, 8 per cent) but, for the small farmer, that loan is a pie in the sky.
A 2011 study by Sukhpal Singh, then professor at the Ludhiana-based Punjab Agricultural University, and academic Tejinder Dhaliwal of Punjabi University, Patiala, notes that arthiyas further tighten their grip on this ecosystem by catering to the farmer’s everyday needs—via groceries, rice threshers, and units selling seeds, fertilisers and pesticides. The access to informal credit cements small farmers’ dependence on arthiyas.
This is why the agitating farmers are divided on the DBT issue. Farmer leaders Darshan Pal Grewal and Joginder Singh Ugrahan support DBT but question the timing of the Centre’s move. The Samyukt Kisan Morcha, the consortium of unions agitating against the farm laws, has cautioned Goyal’s ministry against “hasty” implementation of DBT. The ministry has given the Punjab government six months to link land records, including ownership, tenancy or crop-sharing partnership deeds of farmers—with the procurement payouts. Charan Singh, chairperson, Punjab & Sind Bank, says farmers go to arthiyas for ease of credit but “not out of lack of [other] resources”—farmers, he points out, also have options such as Kisan Credit Cards and Grameen Cooperative Banks. By one estimate, arthiyas extend over 65 per cent of loans in Punjab villages that do not have banks and about 55 per cent in areas with banks. “The cooperative bank network needs to be improved,” says Singh. While the Centre hopes DBT will break the stranglehold of arthiyas, it will need to work towards giving farmers easier access to financial institutions and building their trust in them. That is unlikely to happen anytime soon.
Notorious gangster-neta Mukhtar Ansari, lodged in Banda jail in Uttar Pradesh, is one of the many prize captives under 24x7 surveillance of the state police, courtesy a recent prison infrastructure upgrade. A total of 3,080 cameras have been installed in 70 prisons in the state. The feed will be relayed to a video wall at the prison headquarters in Lucknow. The project, a brainchild of chief minister Yogi Adityanath, is the first of its kind in the country. Hard to tell who is more nervous, criminals or the prison staff.