Direct benefits

When taxpayer money is used to pay minimum support prices (MSP) for farmers’ produce, its benefits should go to them. And when technology for such direct benefit transfers (DBT) exists — thanks to bank accounts linked to every individual’s Aadhaar and mobile number — there’s no reason why this cannot be ensured. It is, therefore, scandalous that DBT wasn’t, till recently, being implemented in Punjab and Haryana, which together contributed paddy and wheat worth Rs 87,690 crore at MSP value to the Central pool in 2020-21. Government agencies were procuring grain from these two states and paying MSP not to farmers. These monies were, instead, credited into the accounts of arhatiyas or commission agents in wholesale mandis, who, in turn, issued cheques to the farmers. The farmers, it was assumed, got the MSP from the arhatiyas.

It is only from the current rabi marketing season that the Narendra Modi government has made DBT mandatory: No grain purchase will happen until the details of all concerned farmers are uploaded on the official procurement portal to enable online MSP payments to their accounts. The arhatiyas, who wield enormous political clout in the two granary states, have always opposed the new system. The reason is simple: Guaranteed state buying at MSP serves as an indirect security for the loans they extend to farmers. With DBT, they can no longer collect their dues upfront and pay farmers after making the necessary deductions. But the government’s responsibility is to the farmer. The arhatiyas get 2.5 per cent commission for facilitating the entire procurement operations in mandis – from unloading of farmers’ grain to its cleaning, weighing, bagging and final loading onto trucks. This commission is on the MSP. The MSP itself can only be paid to the farmer. It isn’t the government’s job to be a facilitator for loan recovery.

Now that DBT has become the rule for MSP payments — the Modi government’s enforcing it even amidst the ongoing protests against the Centre’s farm laws is striking — the next step should be to cap procurement. In case of fertilisers, the government has imposed an upper limit of 50 bags that any farmer can buy at subsidised rates in a month. It should be similarly possible to restrict MSP procurement to the produce of, say, not more than 10 acres per farmer. The idea here is to extend MSP benefits to the maximum number of, especially, small and marginal farmers — and in states where government procurement is currently insignificant. In the long run, MSP procurement itself should be replaced with per-acre transfers. Farmers are better off with minimum “income” rather than “price” support.