[Editorial Analysis] If farmers are to be paid remunerative rates, the best way to do it isnt through distorting but by literating the markets

Mains Paper: 2 | Agriculture

Prelims level: PM-AASHA

Mains level:  By increasing MSP not only help to increase farmers income but also help in the economy too.

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Context

• The hiked minimum support prices (MSP) of crops to levels covering at least 1.5 times their estimated production costs.

• The Narendra Modi government seems to be tying itself in knots to implement the decision.

• There is hardly a month to go for the commencement of the kharif marketing season, but it is an ominous sign that most crops — from moong, urad and groundnut to bajra and jowar — are selling at below MSPs even before mandi arrivals are to peak.

• A move by the Devendra Fadnavis administration in Maharashtra forcing even private traders to buy at MSPs, or face a one-year jail term, has had to be withdrawn for its sheer imprudence.

• Now, the Union Cabinet has approved a new initiative called PM-AASHA.

About PM-AASHA

• Short for Pradhan Mantri Annadata Aay Sanrakshan Abhiyan, it basically combines three schemes —

• one existing (Price Support Scheme, in which MSP-based procurement of pulses and oilseeds is done by central agencies such as Nafed),

• one tried out by Madhya Pradesh and Haryana with limited success (Price Deficiency Payment Scheme), and

• one new (Pilot of Private Procurement and Stockist Scheme, in which private players have also been enlisted for MSP operations).

Objectives of the scheme

• The intention behind PM-AASHA or even the new 1.5-times-cost MSP formula, the question, however, is again with regard to implementability.

• When market prices today are consistently ruling below MSPs, it only means that the latter does not reflect supply-demand fundamentals.

• That being so, the responsibility for making purchases at MSP and incurring both sales as well as storage losses would be solely on government agencies.

• How much can these agencies buy and store?

• Moreover, how will they dispose of these stocks?

• Nafed is now struggling with the roughly 6.5 million tonnes of pulses and oilseeds it bought in 2017-18 — and which is currently being offloaded back into the market at below MSPs.

• Even if private corporates are entrusted with procuring on the government’s behalf, they will have to be compensated for losses and not merely paid a service charge of up to 15 per cent on the MSP.

• And how does the Modi government plan to put in place all these procurement mechanisms under PM-AASHA in the next one month?

Conclusion

• If farmers are to be paid remunerative rates, the best way to do it is not through distorting but by liberating the markets.

• Let the farmer grow any crop based on market signals and sell anytime at the going price that traders are willing are pay.

• Simultaneously, introduce competition by allowing anybody from anywhere to buy from any mandi within India while doing away with all storage and movement restrictions.

• A truly national market for agricultural produce, coupled with a flat per-acre government payment independent of the crop being grown, is the need of the hour.