PM-AASHA- An Analysis

Context

Cabinet has recently approved a new Umbrella Scheme “Pradhan Mantri Annadata Aay Sanrakshan Abhiyan’ (PM-AASHA)

What is PM-AASHA?

PM-AASHA is a recently launched (September 2018) umbrella Scheme “Pradhan Mantri Annadata Aay Sanrakshan Abhiyan” (PM-AASHA) to guarantee MSP to the farmers. The scheme reflects the government’s commitment to ensure remunerative prices to farmers for their produce as announced in the Union Budget for 2018.

Components of PM-AASHA:

The scheme comprises of three sub-schemes viz.

Price Support Scheme (PSS):

• Physical procurement of pulses, oilseeds and Copra to be done by Central Nodal Agencies in collaboration with state governments
• Both National Agricultural Cooperative Marketing Federation of India (NAFED) and Food Cooperation of India (FCI) to take up PSS operations in states.
• As per norms, the central government will bear the procurement expenditure and losses due to procurement.

Price Deficiency Payment Scheme (PDPS):

• The introduction of the recommendations of NITI Aayog where it suggested “Price Deficiency Payment” for implementation of MSP in crops where procurement is poor.
• Direct payment of the difference between the MSP and the selling price will be made to pre-registered farmers selling their produce in the notified market yard and thus it does not involve any physical procurement.
• The aim of the scheme is to provide the compensation to farmers for agriculture products whenever its price falls below the announced Minimum support price (MSP) and thereby protecting them from losses suffered on account of distress sale.
• All payments will be done directly into registered bank accounts of the farmers.

Note: The scheme has been framed on the lines of Bhavantar Bhugtan Yojana, Madhya Pradesh government’s scheme to protect the interests of oilseed farmers in the state.

Pilot of Private Procurement &Stockist Scheme (PPPS):

• Under this scheme, participation of private sector in procurement operations will be piloted.
• States have the option to roll out the scheme on pilot basis in selected districts/APMCs involving private stockists.

Need for PM-AASHA:

• A major issue with the MSP is its poor coverage. Further, there are certain problems with implementation of MSP such as the procurement centres being far away resulting into heavy transportation cost, non-opening of Procurement centres timely, lack of covered storage/godowns facility for temporary storage of produces, delays in payments, etc. Thus to address the gaps in the MSP system and give better returns to farmers, PM-AASHA is an important step.
• Increasing MSP is not adequate and it is more important that farmers should get full benefit of the announced MSP.Further, it is essential that if price of the agriculture produce market is less than MSP, then in that case State Government and Central Government should purchase either at MSP or work in a manner to provide MSP for the farmers through some other mechanism.
• A holistic approach of solving any issue is important rather than in fragments. Thus, to address issue of farmer’s income and enhancing livelihood, a compressive policy has been the need of the hour

Significance of PM-AASHA:

1. Income Security to farmers: The policy is an important step to achieve government’s commitment to double farmers’ income by 2022. If properly implemented, the scheme is expected to help revive the rural economy by assuring better income to farmers and thus address farmers’ distress
2. Stabilizing commodity markets: It will help in stabilising commodity markets and will also benefit the farmers by providing options to the state governments to compensate farmers when the market prices fall below MSP.
3. Better coverage of MSP: MSP procurement system has been very poor both in terms of geography and the crops covered. The new scheme would ensure better coverage of MSP and provision of crop-wise procurement is expected to benefit both farmers and states.
4. Reduce the need for physical procurement: The PDPS scheme under PM-AASHA will reduce the need for the government to physically procure food crops as the difference between the support and market prices can instead simply be paid in cash to the farmer.
5. Reduce storage and wastage: As the need for physical procurement will reduce, it will also reduce the consequent needs for transport and store them and then dispose of them under PDS. This would also reduce wastage of grains/crops.
6. Reduce food subsidy bill: In recent years, the government has been seeing the accumulation of large food grain stocks in its godowns over and above the buffer requirement. This entails storage and wastage costs that add on to the food subsidy bill. Thus the new policy would help in bringing down India’s food subsidy bill.

7. Crop diversification: Though every year MSPs are announced for different types of crops before the sowing season begins, actual procurement at MSP is restricted to a few crops such as paddy and wheat. This has led farmers to excessively focus on the crops with assured procurement thus resulting in a skewed cropping pattern- primarily oriented towards rice and wheat leading to reduce cultivation of coarse cereals. The new scheme is expected to diversify the cropping pattern and reduce stress on soil and water.
8. Improve procurement infrastructure: The involvement of private sector in procurement will help improve the process and infrastructure of procurement.

Issues and Challenges:

1. Procurement Infrastructure: The NITI Aayog in its 2016 evaluation report highlighted that the procurement infrastructure in India is inadequate. However, recent initiatives under PM-AASHA have not focused on improving the procurement infrastructure.
2. Distribution System: Another important concern is lack of an efficient distribution system. For example, NAFED has a stock of 4 million tonnes of pulses and oil seeds because of previous 2 years’ procurement. However, their distribution policy is still non-existent.
3. Undue benefit to traders: Critics has also raised concerns over price manipulation by traders. The rural trader has great clout in the present political set-up and can manipulate prices.
4. Procurement by Private Players: Previously, FCI and state agencies have engaged private companies for procurement of wheat and paddy from farmers at MSP. However, the process has not been smooth and the companies have taken years to get their expenses reimbursed by the government.
5. Issues with price deficiency payment scheme:

• Reports on Bhavantar Bhugtan Yojna, has highlighted operational challenges of PDPS. Such challenges are also a concern for implementation of PDPS under PM-AASHA.
• The price deficiency model also suffers from cumbersome procedures leading to harassment of farmers and delays in payments

6. Funding: Due to depressed prices in open market, NAFED incurred losses since 2012 and amounted to about Rs. 1,083 crores as of September 2016. However, these losses have not been timely reimbursed by the Government of India. The funding and financial condition of NAFED is a major concern over successful implementation of Price support scheme
7. Recent issue:

• The All India Kisan Sangharsh Coordination Committee has calculated a total loss of Rs. 1150 crore to farmers in the first three weeks of the current season due to the government’s failure to ensure that crops are sold at MSP.
• The states have failed implement the scheme. Only Madhya Pradesh has opted for the cash payment component. No other state has readied the IT infrastructure needed to implement it

Way Forward

• Efficient implementation will be the key to the success of PM-AASHA. The government should ensure hassle-free and easy registration of farmers.
• The scheme should target small and marginal farmers so as to improve their economic condition
• The government should effectively check price manipulation by traders. The Centre first needs to break the trader lobbies at mandis. This could be done by widening the competition by inter-linking mandis.
• Further, it is of paramount importance to improve procurement infrastructural facilities
•  Income support measures should be taken for farmers to alleviate farm distress