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Is Centre arm-twisting farmers by ‘forcing’ Punjab to issue payments to farmers via DBT? A fact check

The delay and regular pressure on the central government to extend the deadline hints towards the stronghold of Arhtiyas in the state government functioning.

On April 4, Congress leader Navjot Singh Sidhu called Union Minister Piyush Goyal a ‘liar’ and claimed that if his letter to Punjab Chief Minister Amarinder Singh urging online MSP payment gets implemented, small farmers will become the biggest sufferers. While addressing the media in Patiala from his residence, he alleged that Goyal’s action was part of a larger conspiracy.

Sidhu further claimed that the centre was targeting Punjab, and the recent letter by the union minister is was full of lies. He said that Goyal mentioned in the letter that the land record department of Punjab has all the records of the land record holdings, which is incorrect. While citing a national sample survey of 2012-13, Sidhu claimed, “24 per cent of farming is on a contract basis”. According to Sidhu, contract farming happens on an oral contract, and if Goyal’s letter “is implemented in letter and spirit, no farmer will get payment. The small farmer will be the biggest sufferer.”

The centre is indulging in arm-twisting, alleged Sidhu

While accusing the centre of promoting private sector-led by “Ambanis and Adanis”, Sidhu claimed that the move could be termed as “economic blackmail of farmers”.

He further claimed that the centre is arm-twisting farmers as they are protesting against the Agriculture laws.

All institutions are being used against farmers, alleged Sidhu

Reserve Bank of India has denied extending the cash credit limit to Punjab. Citing the RBI’s move, Sidhu claimed that it is clear all institutions of the country are being used against farmers. “The centre is giving relaxations to private companies to return bank loans, but no such relaxation ever is given to farmers,” he said.

Punjab CM’s letter to Prime Minister

On April 3, in a letter to Prime Minister Narendra Modi, Punjab Chief Minister Amarinder Singh sought a continuance of the existing system of payment to farmers via Arhtiyas till a consensus is formed on the issue of Direct Benefit Transfer (DBT). CM Singh claimed that Arhtiyas are not middlemen as assumed by many, but they are service providers between the farmers and the procurement agencies. He further urged the PM to ensure that the livelihood of the farmers and all others involved so that the procurement of the food grains is not jeopardized.

CM sought a meeting before the “situation gets out of hands”

In his letter, CM Singh sought a meeting with PM Modi to inform him of the concerns of various stakeholders in regard to changing the existing payment system. He urged PM to give time “before the situation gets out of hand”. He further expressed concerns that the Government of India is following a pattern in some of the recent one-sided decisions, which can be asserted as efforts to “rock” the legally sanctioned and well-established institutional and social arrangements through some guidelines and directives.

He said, “While I fully endorse the views that as a society, and a nation we have to continuously evolve and reform, and as the political leadership of the world’s largest democracy, we have to continuously think of improving, but I strongly believe that reforms are most successful and sustainable if carried out through a consultative process with all stakeholders, ensuring ownership of all.”

Union Minister Piyush Goyal’s letter to Punjab CM

On March 27, Union Minister Piyush Goyal wrote to Punjab CM Amarinder Singh and urged him to streamline their procurement and payment procedure in line with GOI guidelines of direct online payment to farmers and compliance with Public Finance Management System (PFMS) since 2018. As of now, Punjab is paying the farmers against the procured produce via arhtiyas. The government of Punjab has yet to integrate its land records with the central procurement portal hence delaying to implementation of the guideline of the central government to pay using DBT to the farmers’ accounts.

Union Minister Piyush Goyal’s Letter to CM Singh

Liquidation of the wheat stock

In his letter to the CM, Union, the minister said that it was brought to his notice that the Reserve Bank of India declined for extension of time for RMS 2018-19, which expired on December 30 2020. As a result, the account of the Government of Punjab has become “out of order” and would be classified as NPA by March 31, 2021. The Government of Punjab had thus requested the Food Corporation of India (FCI) to evacuate 22.32 LMT wheat crop year 2018-19 from Punjab.

Understanding the gravity of the situation, Goyal said that FCI and Railways had accorded overriding priority for evacuation of 2018-19 crop year wheat. The minister that it will mitigate the hardship of people and farmers of Punjab and possibility of a food credit account of Government of Punjab of Rs.89,290 cr. Becoming NPA. The evacuation of the crop is being monitored on a day-to-day basis, the minister added.

The minister further informed the CM that the FCI had already evacuated 18.82 LMT of 2018-19 crop year wheat out of 22.42 LMT that was lying with the State Agencies of Punjab. The remaining 3.60 LMT would be evacuated in the coming days. He said that the centre is doing its bests to ensure that the State of Punjab does not face any financial problem in this regard.

Follow Haryana’s payment system

The Union Minister urged the Punjab government to enable direct online payment to farmers that they had been asking to do since 2018. He said, “In the interest of farmers, GOI has been requesting the State Government of Punjab to streamline their procurement and payment procedure in line with GOI guidelines of direct online payment to farmers and compliance of Public Finance Management System (PFMS), since 2018.” However, the state of Punjab had been seeking an extension on the timelines.

The minister said, “The State Government have time and again sought an extension on these timelines which have been exempted during KMS 2019-20, RMS 2020-21 and KMS 2020-21, but despite giving sufficient time to comply with the guidelines and series of meetings held, State has not implemented these provisions so far.” He said that the Central government has again asked the state to implement DBT WEF the upcoming RMS 2021-22, i.e. April 1, 2021.

Letter to CM to implement DBT system for RMS 2021-22

While addressing the issue of contract farming, Goyal said that the C&MD of FCI had recently visited Punjab and Haryana to assert the preparedness for implementation of the DBT system. He found that Haryana was fully prepared to implement the system by integrating the land records with the e-procurement portal. However, the state of Punjab had not put up the required IT infrastructure in place. “Land records in Punjab are available with the Revenue Department and need to be integrated with the procurement portal, i.e. Anaj Kharid, which can be easily done before the ensuing Rabi season, or at least verification would be required from revenue officials,” he added.

The minister further added that all the major procuring states have already implemented the guidelines. Some states are using biometric authentication of farmers at the time of procurement, making it much easier to track the procurement and initiate payments.

One of the major issues that the Punjab government had raised was that the land in Punjab is being given on lease for tilling by absentee landlords, which may face title ship problem. The minister urged the government to follow the method developed by Haryana in which the details of tenant/sharecropper can be uploaded on the portal with the disclaimer that this would not be a legal document for claiming ownership through tenancy.

Punjab has been delaying DBT to farmers since 2012

Since 2012, the Government of India has been making efforts to initiate Direct Benefit Transfer of MSP to farmers across India. Since NDA come to power in 2014, major steps had been taken in the manner to bring more transparency and accountability to the existing system of MSP payment. MoUs were signed between the state governments and central government where state agencies are marked responsible for ensuring the use of EAT (Expenditure Advance Transfer) module of PFMS (Public Financial Management System) while making the payment.

The e-mode of payment ensures that all stakeholders like farmers, arhtiya and mandi get their payments directly instead of getting through another value chain participant. It ensures transparency without replacing the current APMC system, thus beneficial for everyone involved in the process. However, since 2012, Punjab has been delaying the implementation of DBT in MSP payments.

In 2018, the Department of Expenditure of the Ministry of Finance directed all registered agencies to mandatorily use the EAT module by 15.6.2018. In case the states fail to follow the instructions, no funds would be released for the payments. However, the state of Punjab failed to adhere to the orders and kept asking for an extension. It has to be noted that the government of Punjab was reminded to implement the system by the Department of Expenditure, Ministry of Finance, in 2018 and 2019. The state replied that it is not possible to implement the system due to resistance from Arhtiya and APMC Act provision for making payment through Arhtiya.

Major procuring states except Punjab have implemented the system

In January and February 2021, three meetings were held by DFPD with officers of Punjab in which Punjab said that the integration of the Anaaj Kharid portal was still under process. In March 2021, DFPD again wrote to Punjab and informed them that its counterparts, including UP, MP, Bihar, Andhra Pradesh, Telangana, Tamil Nadu etc, have already implemented the DBT system.

Sources in the government said, “while the central government is trying to free the farmers from Arhtiyas for their survival, Punjab continues to evade the complete implementation of direct online payment to farmers. Land records are available but have not been integrated with the procurement portal for ensuing Rabi season, leaving the farmers at the mercy of Arhtiyas.”

Arhityas were deducting charges from MSP

OpIndia accessed an internal government note that showed in 2020, during the verification process, the central agencies found that Arthiyas were deducting Rs 12 per quintal from MSP payment at the cost of the farmer. It was revised only after vigorous follow up. The note further added, “The GoI stand is that the entire MSP should be transferred to farmers’ account and should not get parked into arthiya’s account. This will empower farmers and ensure transparency.”

Internal note on arhatiyas

The Food Ministry said in the note that a myth had been created that DBT may jeopardize the land title. However, it is not true. Mentioning the software developed by Haryana, the note added that it provides various options like “whether the owner is a tiller, or it is sharecropping or contract farming etc., with a disclaimer that this arrangement is only for the purpose of payment and has no relation to the titleship issue.”

The ministry said, “we need to take a clear position to ensure implementation. In case any waiver is considered again, this issue will get deferred. In the last Kharif Season 2020-21, the total procurement of rice in Punjab was more than the estimated production. This was due to non-verification of farmers and non-linking of their accounts.”

Arthiyas’ stronghold in government functioning

The government of Punjab is trying to publicize that the central government is implementing DBT of MSP to farmers as an arm-twisting tactic against the state and the farmers. However, the process of introducing DBT to pay the farmers against the produce has been in the pipeline since 2012. It is only Punjab among the top states from where the centre procure the maximum food grains that have not implemented the system yet. The delay and regular pressure on the central government to extend the deadline hints towards the stronghold of Arhtiyas in the state government functioning.

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