State Initiatives for Addressing Agrarian Distress

What is the issue?

Farm distress is likely to be a major aspect in the upcoming Union Budget.
In this context, schemes piloted by Madhya Pradesh and Telengana government to ease farmer woes is worthy of discussing.

What is the scenario in the sector?

Agri-GDP growth has fallen to around 2% per annum in recent years and the real incomes of farmers have fallen as well.
The sector’s growth is much below the government’s target in production and in doubling farmer incomes by 2022.
With assembly elections in 10 states due later this year, the states going to the polls are making attempts to woo farmers.
While some have announced loan waivers, others are trying to fix farmers’ financial distress emanating from tumbling farm prices.

What is Madhya Pradesh’s Scheme?

Bhavantar Bhugtan Yojana - BBY is a “price deficiency payment” (PDP) scheme, being undertaken by the government of Madhya Pradesh.
BBY assures that farmers at least get the MSP value for their crops.
8 kharif crops namely Soybean, maize, urad, tur, moong, groundnut, til, ramtil are covered under the scheme.
The Structure - Under the scheme, farmers will have to first register on a portal and their sown area is then verified by government officials.
Subsequently, the farmer allocated a time slot to bring his produce to the mandi, where the quantity eligible for deficiency pricing is determined.
The quantity is determined based on the average productivity of the particular district and the cropped area of the particular farmer.
The farmers receive the difference between “average sale price” (market price) and “minimum support price” (MSP), directly into their bank accounts.
It hence provides an alternative to physical procurement of commodities at MSP, which comes with the hassles of storage, transport and marketing.
The Problems - Only those farmers registered on its portal gets benefited.
Financial burden will be more than 90% of the state’s total agri-budget, rendering BBY unfeasible.
The Haryana government too has announced a somewhat similar scheme for vegetables but it does not even cover the full cost of production.

What is Telangana’s Scheme?

The government of Telangana is piloting an "Input support scheme" modelled on the line of EU's "single payment scheme".
The Structure - It involves paying Rs 4,000 per acre to every farmer twice a year for the kharif and rabi seasons.
The payment is mainly to cover the cost of major farm inputs such as fertilisers, seeds and pesticides.
It is also to relieve farmers from taking loans from moneylenders.
This doesn’t require the farmer to register his cultivated area and the farmer isn’t constrained by crop choice or sale timelines.
This model is crop-neutral, more equitable, more transparent, and gives farmers the freedom to choose.
The Problems - It is being linked to land ownership. Thus it automatically leaves out tenant cultivators of such input supports provided.
The payments are on a per-acre basis. Thus a sizeable share of the payment will go to undeserving large farmers and absentee landowners.
There is no provision to ensure that the financial aid is actually utilised for purchasing farm inputs.
Thus the programme needs modification to lend income support to those who are actually engaged in agricultural activities.

Source: Indian Express