Cabinet approves new procurement policy to ensure MSP to farmers

As per the new procurement policy the government will compensate the farmers' loss if the prices of oilseeds fall below the MSP.

Image: PTI/Representational

New Delhi: In a major relief to the farmers of the country, the union cabinet gave a nod to new procurement policy in a meeting headed by Prime Minister Narendra Modi on Wednesday, which will ensure minimum support price to them. Citing sources PTI said that the new procurement policy for crops has been approved by the cabinet to ensure MSP to farers. The decision comes a year before the 2019 general elections and at a time when market prices plunge below the prices set by the government. As per the new procurement policy the government will compensate the loss if the prices of oilseeds fall below the MSP. The new mechanism will also mark a shift from the existing system where the crops are purchased by the government and the MSP price is transferred to farmers' account through Direct Benefit Transfer. Now, the government will allow states to rope in private players for procurement of oilseeds. In the budget this year, the government had announced that it will put in place a fool-proof mechanism to ensure minimum support price (MSP) to farmers. It had asked think-tank Niti Aayog to suggest a mechanism in consultation with the union agriculture ministry and states. According to the sources, the agriculture ministry's proposal on new procurement policy 'Annadata Maulya Samrakshana Yojana' was taken up for discussion in the cabinet, and the same has been approved. Under the new policy, the state governments will be given an option to choose multiple schemes to protect farmers when prices fall below the MSP. A new scheme 'Price Deficiency Payment (PDP)' has been framed on the lines of Madhya Pradesh government's Bhavantar Bhugtan Yojana (BBY) to protect oilseeds farmers only. Under the PDP, the government will pay to farmers the difference between the MSP and monthly average price of oilseeds quoted in wholesale market. This would be implemented for up to 25 per cent of the oilseeds production in a state. Both PDP and private players' participation will be exclusively for oilseeds because the government wants to bring down the country's import dependence on cooking oils, the sources said. Under the new policy, the states will also have an option to choose the existing Price Support Scheme (PSS), under which central agencies procure commodities covered under the MSP policy when prices fall below the MSP. "The states can choose either PSS or PDP or engage private players in procurement to ensure MSP to farmers," the sources added. The Food Corporation of India (FCI), the government's nodal agency for procurement and distribution of foodgrains, already procures wheat and rice at MSP for supply through ration shops and welfare schemes. The centre also implements Market Intervention Scheme (MIS) for procurement of those commodities, which are perishable in nature and are not covered under the MSP policy.