Rising costs force Chhattisgarh to end rice bonuses

By: | Updated: January 17, 2015 1:35 AM

Having been hit by the steep hike in the financial cost of unlimited paddy procurement and offering...

Chhattisgarh agencies have purchased only 2.4 million tonnes of rice so far this season, which ends on January 31.Chhattisgarh agencies have purchased only 2.4 million tonnes of rice so far this season, which ends on January 31.

Having been hit by the steep hike in the financial cost of unlimited paddy procurement and offering bonuses over and above the Centre-fixed minimum support price (MSP) for the grain, the Chhattisgarh government has decided to limit the purchases from farmers for the ongoing kharif season (2014-15) and pay no bonus.

Rice procurement by the state, credited for its strong public distribution system (PDS) and recent years’ increased contribution to the Centre’s grain pool, will likely be way lower than 3 million tonnes this season, compared with the previous year’s 4.29 million tonnes. The state, which had spent about R2,400 crore as bonus in the last kharif season, will expend nothing on that count in the current season.

According to state food department officials, paddy procurement this season is being contained at 15 quintal per acre, compared with 25 quintal purchased in the previous year.

The state government was forced cut down on paddy procurement this season following the Union food ministry’ decision in June 2014 to limit procurement for the central pool only up to the requirements of PDS and other food-related schemes, arguing that bonus payments by state governments distort the market of the concerned commodity and drive private buyers out of the market. Earlier, the Centre used to lift the entire rice stock procured by a state.

Chhattisgarh agencies have purchased only 2.4 million tonnes of rice so far this season, which ends on January 31.

graph-rice

As per official data, the annual financial outgo towards bonus paid to around 11-lakh-odd farmers in the central Indian state had risen 702% to R2,391 crore in 2013-14 from R298 crore in 2011-12. Bonus paid to paddy farmers has increased from R50 per quintal to R300 between these years. The state, with a modest budget size of R50,000 crore, was finding it difficult to cope with the rising financial burden on having to maintain the bonus and pay extra food subsidy to beneficiaries under a state policy.

Besides, due to payment of bonus more and more farmers are shifting to paddy cultivation, shunning many traditional crops such as pulses and oilseeds, leading to a distortion in the state’s farm output.

“We can’t keep on continuing giving bonus to farmers at the cost of state’s financial health. The bonus payment to paddy farmers is a hindrance towards crop diversification in the state ,” an official said. As reported earlier, the Centre had told the Food Corporation of India to restrict its purchase of grains from states offering bonuses to farmers additional to the MSP. This led to Rajasthan and Madhya Pradesh withdrawing the bonuses and the latest to comply with the the Centre’s diktat is Chhattisgarh.

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