Modi govt plans a bold new price support scheme to mitigate farmer distress

The Modi government as per reports, is in consultation with states to launch a new price support scheme for farmers, for preventing distress sales below the minimum support price (MSP).

Under this new price support scheme, the states will be free to procure all the crops which contain a MSP. This excludes wheat and rice which are already sourced by the centre for its public distribution system.

Under this scheme, the states can procure any amount of millet, pulses, oil seeds and coarse grains to support the farmers. In case a loss is incurred by the states, the centre will compensate them for up-to 30% of the total procurement cost. This number will go up to 40% for north-eastern and hilly states.

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Under the current situation, even though MSPs are announced for 23 crops, the total procurement under the scheme is pegged at 33% for wheat and rice, 8% for pulse and 1% for oil seeds.

In this new scheme, the states will decide the types and quantity of procurement of crops when wholesale prices drop below the MSP. They can then choose to either use the procurement for nutrition-support programmes or sell them in the open market.

The new scheme would ensure that the farmers’ risk after the harvest is mitigated as he/she will be assured a fixed price for the crops.

We had recently reported about the various welfare schemes, which are changing the face of rural India ahead of the 2019 Lok Sabha elections.

This includes implementation of schemes like:

  • Jan Dhan Yojna ( Banks opening bank accounts of citizens with minimum documentation and zero balance)
  • The Payment of Wages (Amendment) Act 2017 ( Employers to pay wages to workers through cheque or by transferring their wage to their bank account)
  • Aadhaar ( Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016 ( Seeding Aadhaar number for PDS and MNREGA, the foundation stone of Direct Benefit Transfer scheme)
  • Pradhan Mantri Ujjwala Yojana ( Which has ensured almost universal LPG connections in Rural India)

All these schemes as per the report are changing the dynamics of Rural India for the better, and a correct implementation of the new MSP scheme might further consolidate the rural scene in the coming years.

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