However, the government think tank has suggested that the farmer would be entitled to payment of a maximum of 10% difference between the threshold price and the market price.
The government is mulling tweaking the minimum support price mechanism for procuring farm producing contending that it had distorted cropping patterns and put excessive focus on the cultivation of wheat, rice and sugarcane.
Last month, the NITI Ayog had suggested migrating to the price deficiency mechanism in which the farmer will be paid subsidies if the price of his crop slipped below the threshold price fixed by the government.
However, the government think tank has suggested that the farmer would be entitled to payment of a maximum of 10% difference between the threshold price and the market price.
A key demand of farmers across the country has been fixing MSP as per the formula suggested by noted agricultural scientist M S Swaminathan. In a report submitted to the government in 2006, he had recommended fixing MSP at 1.5 times the cost of cultivation incurred by the farmer.
Prime Minister Narendra Modi had made the implementation of the Swaminathan Committee recommendations an electoral promise but has been unable to deliver on the MSP front.
This week, Raju Shetty, a prominent farmer's leader and Lok Sabha member from Hatkanangle in Maharashtra, snapped ties with the NDA contending that Modi has been unable to keep his promises to farmers.
“MSP has distorted cropping patterns, with excessive focus on the cultivation of wheat, rice and sugarcane in the procurement states at the expense of other crops such as pulses, oilseed and coarse grains,” the NITI Ayog said in its Three Year Action Agenda released recently.
It said the MSP regime also discriminated against eastern states where procurement was minimal or non-existent.
According to the Ayog, the 'price deficiency payment' system could help remove distortion in the MSP mechanism to some degree.
Under the new system, each farmer would have to register his crop and acreage sown with the nearest market-yard and payments could be made to his bank accounts if market price fell below the floor price fixed by the government.