NITI Aayog proposes a shift from MSP-driven procurement

The think-tank panel has blamed the politically sensitive MSP policy for having distorted the cropping patters in the country.

Published: 03rd May 2017 07:13 AM  |   Last Updated: 03rd May 2017 07:19 AM   |  A+A-

Express News Service

NEW DELHI: The NITI Aayog has proposed a shift from the minimum support price (MSP) driven procurement of wheat, rice and sugarcane to the subsidy-driven mechanism for encouraging farmers to opt for crops in which India is not yet self-sufficient.

The think-tank panel has blamed the politically sensitive MSP policy for having distorted the cropping patters in the country.

“The MSPs have distorted cropping patterns due to their use in certain commodities in selected regions,” the NITI Aayog stated in an agenda submitted to the government.

The BJP in the run up to the 2014 Lok Sabha elections had promised to ensure 50 per cent profit to farmers on their input costs, which the experts expected would be translated through higher MSPs.

With the NITI Aayog blaming the MSPs for regional disparity—benefits being passed only to the North-west region—it’s believed that the Modi government would make a change in approach. The think tank has proposed the government should adopt the system of “Price Deficiency Payment” against MSPs without unnecessarily going for procurements.

“While MSPs may still be used for need-based procurement, under the price deficiency payment, a subsidy may be provided to farmers on other targeted produce, contingent on prices falling below an MSP-linked threshold,” the NITI Aayog stated.

The move has apparently come after reports emerged from various parts of the country that after bumper crops of pulses farmers could not get MSPs due to weak procurement mechanism following which they had to consider distress selling.      

A senior official of the NITI Aayog said MSPs for wheat, rice and sugarcane have “led to the depletion of water resources, soil degradation and deterioration of water quality in the North-west regions”. The panel also argued eastern states, where procurement at the MSPs is minimal or non-existent, have also suffered.

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