Under the area-based income compensation scheme, farmers would be paid the difference between the actual price they receive and the government’s minimum support price
The government is considering a NITI Aayog proposal for distressed farmers, which will have a minimum impact on the exchequer and be least ‘market-distortionary’, the Business Standard reported.
Sources told the newspaper that this model will allow free play of market forces and not impact exports as compensation will be paid directly to farmers.
As per the proposed area-based income compensation scheme, farmers would be paid the difference between the actual price they receive and the government-mandated minimum support price (MSP). The compensation, the report suggests, will be determined on a per acre basis by using district-level estimates of marketable surplus and prices in the harvest season.
Payout will be different for each district and could be easily implemented using daily price data from the government’s agmarket.nic.in portal. Farmers could also be compensated for past losses using this method as the portal has price data for the past several months as well, the report said.
The debacle in the recently held state elections -- Madhya Pradesh, Rajasthan and Chhattisgarh -- due to the farm distress is forcing the ruling Bharatiya Janata Party (BJP) at the Centre to consider a relief package.
However, the proposal has two drawbacks. One, it will only be applicable in districts where government procurement for public distribution system (PDS) is in operation as prices in such places are closer to MSP. Two, the payout will only be applicable to those crops for which the Centre declares MSP, the report suggests.
