Ministry of Agriculture to seek cabinet approval to ensure MSP to farmers
In order to implement the ambitious MSP schemes announced in the budget, the Agriculture Ministry will soon move a cabinet note seeking approval for a new policy that ensues MSP to farmers.
As per a report published by mydigitalfc.com, the finance ministry has asked the agriculture ministry for estimate of expenditure arising out of the scheme as the North Block will have to earmark funds for the initial rollout.
The proposed policy aims to rope in both states and private firms in procurement of crops other than wheat and paddy for ensuring MSP. The idea is to improve the speed of response and effectiveness of procurement in case prices drop below MSP.
The policy proposes three models — Market Assurance Scheme (MAS), Price Deficiency Procurement Scheme (PDPS) and Private Procurement and Stockists Scheme. The policy will allow the states to implement either of the models of procurement.
The Market Assurance Scheme is to be implemented by state governments, who can decide on the basis of local conditions, to procure through their own agencies or any other private agency authorized by states.
The states will also be responsible for procurement and liquidation of the procured commodity. The central government will compensate the operational loss, if any, on value of MSP, up to a maximum 30–40%, reports Economic Times.
In case of PDS, if the sale price is below a model price then the farmers would be compensated to the difference between the MSP and actual price, subject to certain conditions and ceiling.
With the aim to encourage private sector participation in MSP-linked procurement, the policy proposes a transparent e-market platform in which private firms will be enrolled through a transparent biding to purchase farm produce when prices drop below the MSP. The private firms will be given tax incentive and a commission.
The existing price support scheme and market intervention scheme will be discontinued once the new policy is in place.
Finance Minister Arun Jaitley had announced in the Budget that the government will fix the minimum support price (MSP) of Kharif 2019 crops at least 1.5 times than the cost of production.
“The proposal given in the Budget aims at providing MSP to farmers. MSP is fixed by taking into consideration the input cost, labour cost. A2+FL and (the farmer) gets 50 per cent more.” Jaitley had said.
As per a report published by Mint, the twin budget promises will lift farm-gate prcies by 15% and increase rural income, but the transmission of this price rise to wholesale and retail levels will have strong implications for inflation, a NITI Aayog internal document has warned.
