UPSC Exam Preparation: Topic of the Day – Price Deficiency Payment System
A new idea has been mooted out by the Niti Aayog called, “Price Deficiency Payment” in order to support the farmers in the event when the market price falls below Minimum Support Price (MSP). This system aims to provide a part (for example 70 %) of the difference between the MSP and the market price to the farmers.
What is Price Deficiency Payment System?
Under Price Deficiency Payment, proposal has been made to compensate for the difference between the government-announced Minimum Support Price and the actual market price for selected crops. For crops such as rice and wheat where it is effective currently, MSP announcements will continue.
For other targeted crops, price deficiency payments will be made. However, it has to be noted that there may be a cap on the extent to which the Centre will bridge the gap between MSP and market price.
It has been Niti Aayog has said that the farmer may be entitled to the difference up to say a certain percentage of the difference. To avail this benefit, each farmer would has to be registered with the nearest APMC mandi and report the total area sown. The subsidy shall be paid via Direct Benefit Transfer (DBT) into the farmer’s Aadhaar-linked bank account.
Why is it important?
The key benefit from the price deficiency payment is that it will reduce the need for the government to actually procure food crops, transport and store them and then dispose of them under PDS. The PDP system may be more effective than MSPs at ensuring that cropping patterns in India respond to consumer needs. It may also ensure that more farmers actually benefit from price support.The difference between the support and market prices can instead simply be paid in cash to the farmer. It is believed that the Price Deficiency Payment can also keep India’s bill on food subsidies under check.
Schemes launched by different state governments:
Mukhya Mantri Bhavantar Bhugtan Yojana:
It is an ambitious scheme launched to ensure that farmers receive minimum support prices (MSP) for pulses and oil seeds.
The Haryana Government launched country’s first ‘Bhavantar Bharpai’ a scheme which would come into effect in January through which the state government would compensate farmers for price deficit for agricultural produce in which tomato, onion, potato and cauliflower have been included. It is applicable only to farmers growing vegetables.
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