Niti Aayog zeroes in on three models to ensure MSPs for 24 major crops

The Niti Aayog on Friday began consultations with states on policy options to ensure implementation of the minimum support price for 24 major crops.

The Centre might have to choose more than one mechanism, depending on what the states prefer. These could either be direct procurement (buying of produce) from farmers, payment of the difference between minimum support price (MSP) and the ruling average price or a direct lump sum payment at the beginning of each sowing season. The Centre also expects private-sector proposals to procure in exchange of incentives, such as tax breaks, an official said. 

The meeting was led by Niti Aayog vice-chairperson Rajiv Kumar and had secretaries from states, representatives from the Prime Minister’s Office as well as minister of state for agriculture Gajendra Singh Shekhawat.

The meet focused on three possible models to ensure that MSPs are realised by farmers. The first policy option is the market assurance scheme, under which the states can procure (buy) farm produce directly from the farmers at MSP rates when market prices dip below MSP. The Centre would then provide “compensation of losses up to certain extent of MSP after the procurement and price realisation out of sale of the procured produce,” an official statement said. 

The second option is the price deficiency procurement scheme, which is currently being implemented by Madhya Pradesh as the Bhavantar scheme. Under this, if the sale price is below the “modal” price — a kind of an average price — then the farmers are paid the difference between MSP and the actual price, subject to a ceiling which may not exceed 25% of the MSP. If the modal price in neighbouring states is above the MSP, then this scheme doesn’t apply. 

The third option is called the “private procurement and stockist scheme”, under which private firms can be deployed to procure at MSP and the government could offer some tax incentives and commission.