Modi Government Plans New Price Support Scheme To Fix Rural Distress

Prime Minister Narendra Modi’s government, in consultation with the states, is planning to introduce a ‘price support scheme’ to mitigate distress in rural India due to sales at prices below the minimum support price (MSP), Mint has reported.

As part of the new scheme, the states will be allowed to purchase all crops from farmers for which MSPs have been announced, other than rice and wheat, which the centre is already procuring for the public distribution system.

The government, under the new scheme, plans to compensate states for any losses capped at 30 per cent of the procurement cost. Disposal of the procured crops will be the responsibility of the state.

With the new scheme in place, the government will ensure an assured price for the farmer, mitigating the price risks faced by farmers following harvest.

“While any intervention and attention to agriculture marketing is welcome, we must await full details of the scheme to make any specific comments,” Mint quoted farm expert and visiting fellow at the Indian Council for Research on International Economic Relations, Pravesh Sharma, as saying.

“However, it can be generally observed that government does not seem to risk spending political capital to directly take on poorly functioning agriculture markets, where lack of competition, cartelization and opaque price discovery are the root causes of price distortions,” he added.