PM-AASHA, price deficiency payment scheme: A fact check on its progress

News: After the repeal of farm laws, farm groups are demanding for a legal guarantee for the minimum support price (MSP).

As of now, various options are being suggested to meet the demand of protesting farmers. One of the schemes that has found repeated mentions in various commentaries is the price deficiency payment scheme (PDPS).

It was modelled on the lines of the Bhawantar Bhugtan Yojana (BBY) started by the Madhya Pradesh government a few years back.

What is PM-AASHA scheme?

– Read more here: https://forumias.com/blog/pm-aasha-an-analysis/

What are the significant provisions under PM-AASHA scheme?

Cap on procurement: Under PM-AASHA, procurement is done on request from the state government and purchases are capped at 25% of the total production of the crop in the state. This can be expanded up to 40% if the commodity is used for PDS or for any other state welfare scheme.

No tax: No state could levy any tax such as mandi tax on such procurement.

Cap on central expenditure: The central expenditure on all the three components of PM-AASHA is limited to 25% of the state’s total production of oilseeds and pulses.

The state would have to arrange funds from its own resources if it wants to procure or support over and above the mandated 25%.

Timely compensation: Another important guideline of PM-AASHA is that farmers, whether under PDPS or Price support scheme (PSS) or private sector pilot, will have to be paid their remuneration within a fixed time period.

For instance, in case of PSS, the purchase price should reach farmers within three days of receipt of their produce.

How the PM-AASHA Scheme has progressed so far?

Acc to the recent report of The Commission for Agriculture Costs and Prices (CACP), the PSS has made significant progress in terms of procurement of pulses and oilseeds by NAFED. However, PDPS and PPSS have not made much progress.

The commission pointed that absence of regular disposal mechanisms and market infrastructure unlike wheat and paddy for oilseeds and pulses as the main problem.

Recommendation: The commission recommended that PDPS and PPSS can be strengthened by addressing the procurement issues of oilseeds and pulses.

How was the experience with PDPS so far in Madhya Pradesh?

Since the beginning, the experience with the PDPS scheme in Madhya Pradesh is not favourable. The scheme is plagued with many issues such as,

Firstly, the method of calculation was complicated as well as the process of registration and the multiple paperwork involved.

Secondly, a large number of farmers did not register themselves on the portal, and they had to sell their produce at prices which were lower than the announced MSPs.

Thirdly, there were allegations that farmers were conspiring with traders to keep prices down to widen the differential between the actual price and MSP.

Fourthly, Madhya Pradesh farmers lost almost Rs 200 crore due to manipulation in the scheme as per a report by scroll.in, based on RTI responses.

Source: This post is based on the article “PM-AASHA, price deficiency payment scheme: A fact check on its progress” published in Business Standard on 10^th Dec 2021.