Last month, Agriculture Minister Shivraj Singh Chouhan announced an all-India rollout of his brainchild in Madhya Pradesh when he was the Chief Minister there — the Price Deficit Payment Scheme (PDPS) for oilseeds, presumably for starters. Called Bhavantar Bhugtan Yojana, this scheme was begun in 2017-18, only to be abruptly discontinued in March 2018 amidst reports that it was being gamed by traders.

Under the scheme, farmers of soyabean (among eight other crops) were entitled to be paid the difference between the MSP and the higher of the selling price and the monthly modal price. But reports filtered in that traders had orchestrated a fall in prices. While a panel report appointed by the Centre soon after discounted such allegations, the scheme ran aground with the Centre seemingly losing interest. It is just as well that this policy innovation has made a comeback, with the Centre looking at a coverage of 40 per cent of oilseeds output. As the committee report observes, the scheme’s long-term potential lies in its being able to keep MSP-driven procurement down to buffer needs. This will reduce the storage and distribution costs associated with open ended procurement. Apart from PDPS, timely market intervention systems (MIS) — such as the sale and purchase of onions, tomato and potato by NAFED — can work well to serve farmers’ interests, supplementing the procurement system. With DBT technology, ‘bhavantar’ is very scalable. The scheme now will be in operation for four months in a season, so that sudden arrivals do not crash prices.

However, as the panel points out, Bhavantar’s processes must be simplified for it to attract farmers. Its registration formalities as well as the time taken for farmers to receive payments worked against it in MP. It was necessary for farmers to register separately for each crop, with the authorities verifying the crop area. The advance of technology can simplify such tasks. A time period of 45 days taken to receive payments would only prompt distress sales. To expedite processing of payments, weekly modal prices have been suggested. There were reports in MP of farmers bringing inferior quality produce to avail benefits. Since the PDPS can be availed only at select mandis, it is possible to establish quality checks. In order to expand the scope of bhavantar to non-MSP crops, such as horticulture, the States will have to arrive at benchmark prices. Bhavantar can work well in tandem with e-NAM which improves price realisation. This can reduce the Bhavantar outgo.

But to move ahead on PDPS, modalities for funds and information sharing with States must be worked out. There should be clarity on crops and geographies where PDPS will be viable; the same holds true for MIS. The argument that income support policies, such as PM Kisan Samman Nidhi Yojana or its State variants, are the best option because they do not ‘distort prices’, seems an oversimplified one for a complex sector. The answer lies in implementing the right mix of all options.