Madhya Pradesh's price deficit scheme's budget swells due to price fall

State plans to enrol 2 mn oilseed, pulses farmers; till Thursday, less than a million had joined

Even though only 0.9 million farmers have registered for the much-talked about 'Price Deficit Finance Scheme' of the Madhya Pradesh government till Thursday, the state officials are still confident to get at least 40 per cent of the state's nearly 5 million oilseeds and pulses farmers enrolling (around 2 million) for the programme by the time registrations close on October 15.

The overall target itself has come in for strong criticism for being too low, given that 5 million farmers cultivate oilseeds, pulses and maize.

Madhya Pradesh had budgeted to spend around Rs 2,000-3,000 crore on the programme based on its initial price calculations, but the sharp 25-30 per cent drop in Kharif pulses and maize prices since October has upset its calculations.

It now plans to spend at least Rs 4,000 crore on the programme based on a rough calculation of transferring a minimum Rs 1,000 per quintal on to the bank accounts of all the 2 million farmers who register for the programme.

"As of today, the calculations are based on prices prevailing in October, but the total financial outgo might go up further if prices drop more," Rajesh Rajora, principle secretary in the department of agriculture told Business Standard.

Madhya Pradesh has approached the Centre for sharing the cost burden of the programme, which the latter has agreed to bear half the expenses.

Registrations for the programme were to end on October 11, but was extended for a few more days as the scheme took time to get noticed, forcing worried state officials to embark on a massive awareness campaign.

Special Gram Sabhas were organised in 30,000 Gram Panchayats across the scheme where farmers were physically enrolled for the programme.

"The low level of registrations for the programme so far themselves show how poor the farmers have responded to the scheme as there are lot of problems related to the programme," Kedar Sirohi, founder-member of Aam Kisan Union, a non-political farmers organization said.

Sirohi was on the forefront of the farmers' agitation which gripped the state in June this year, leading to the killing of six peasants in Mandsaur.

State officials meanwhile, counter the allegation of low response saying that of the 2 million oilseeds and pulses farmers whom the state plans to enroll for the scheme, around 1.2 million will be done online while the remaining would be enrolled physically.

"For a scheme which is being roled out on a pilot basis, this is humungous response. Madhya Pradesh has around 7.5 million farmers who cultivate during the kharif season, of which around 1.5 million are engaged in paddy cultivation which has been kept out of the scheme's purview, of the remaining 6 million farmers, nearly half (around 3 million grow soybean) while the remaining grow moong, urad, cotton and other oilseeds and pulses and are eligible to get registered under the scheme," Rajora said.

The Chief Minister's Price Deficit Financing Scheme (Mukhyamantri Bhawantar Bhugtan Yojana) was approved by the state cabinet in August to provide a sort of price risk to farmers who had been agitating for months against falling prices of their produce.

The state administration then had decided to purchase surplus onions and pulses from farmers to provide immediate relief. However, with limited storage capacity, questions were being raised on its ability to manage the huge stocks.

In 2016, around 73 per cent of the 1 million quintals of onions purchased by the Madhya Pradesh government from farmers were destroyed due to inadequate storage space and the state spent Rs 2.88 crore just to destroy surplus onions.

The 'Price Deficit Scheme' as of now covers eight oilseeds and pulses whose production in 2017 is estimated to be around 14.25 million tonnes these include soybeans, maize, tur, moong, urad and groundnut.

Under the scheme farmers would be compensated directly into their bank accounts if the price of a notified crop falls below the MSP, (within a two-month sale window starting from October 16).

But, the compensation will be capped at a pre-determined modal price. No payment will be made to unregistered farmers and also those who sell theirs outside the scheme window.

The modal price will be the average market prices for a particular commodity over a two-month period in Madhya Pradesh and two other states where the crop is grown and traded.

"It remains to be seen on what basis the modal price is calculated also limiting the sale window under the scheme for just two months could encourage force sale," Sirohi said.

G S Kaushal, a former director of agriculture in Madhya Pradesh said that one also needs to look at the reasons behind the very need for bringing such a scheme when the country is not self-sufficient in oilseeds and pulses and has to import huge quantities of these commodities every year.

What the scheme is all about

• Mukhyamantri Bhawantar Bhugtan Yojana (CM’s Price Deficit Financing Scheme)  tries to address price risk to growers
• There are eight commodities under it; four pulses, three oilseeds and one cereals maize, which are part of the MSP mechanism
• A modal price based on average price in nearby mandis and other parameters will be calculated for all. This will be less than the MSP
• If open market prices fall below the MSP but are over the modal price, then  the difference would be transferred into the bank accounts of farmers. But if they fall even lower than modal price, then just the difference between MSP and modal rates gets creditedThe compensation will be available to all farmers who register till Oct 16 and sell between Oct 15 to Dec 15. No compensation would be paid to unregistered farmers and those who sell outside the two-month window
• The compensation will be available to all farmers who register till Oct 16 and sell between Oct 15 to Dec 15. No compensation would be paid to unregistered farmers and those who sell outside the two-month window