Political parties in grain-surplus Madhya Pradesh and Chhattisgarh that have announced bonus over the minimum support price (MSP) may face difficulty in implementing it if voted to power. This is because the Centre is firm that it won’t take over surplus rice and wheat stocks from these states for the ‘central pool,’ beyond the requirement for the public distribution system and buffer.
Typically, when a bonus over MSP is offered for a crop, the farmers tend to grow that in more areas, leading to surplus output.
However, officials said that states instead of providing bonus over the MSP for paddy and wheat can opt for providing financial incentives based on land holding to farmers as is being done under the schemes like Odisha (Kalia) and Telangana (Rythu Bandhu).
In Madhya Pradesh, BJP has announced procurement of wheat at Rs 2,800/quintal (including MSP of Rs 2125/quintal), while for paddy the party has promised procurement at Rs 3100/quintal against the current season’s MSP of Rs 2183/quintal in Chhattisgarh and Madhya Pradesh. Similarly, the Congress has promised paddy procurement at Rs 3000/quintal in Chhattisgarh.
Madhya Pradesh and Chhattisgarh have had significant shares in procurement of paddy and wheat under the government’s MSP operations in the last six to eight years, through stepping up of purchase operations at the local level.
Despite a sharp fall in procurement by the government agencies in the last two seasons, Madhya Pradesh purchased over 7 million tonne (MT) of wheat in 2023-24 rabi marketing season (April-June), which is 27% of total purchase of 26 MT across key producing states.
Chhattisgarh in the 2022-23 season (October-September) procured 5.86 MT of rice, which 10% of the government’s total purchase of 56.9 MT across major producing states.
Both the states follow a decentralised procurement system (DCP) launched in 1997-98 by the food ministry which aimed at ensuring the benefit of MSP operations reach farmers as well as save transit cost for the centre.
A memorandum of understanding (MoU) was signed in 2021 between the food ministry and DCP and non-DCP states for procurement of paddy.
The MoU stated ‘in the situation of State giving any bonus of financial incentive in direct or indirect form, over and above MSP, if the overall procurement of the State is in excess of the total allocation of the state made by the government under TPDS, such excess quantity shall be treated to be outside the central pool,’.
“The state agencies purchase grain from the farmers under DCP through MSP operations while surplus grain after the meeting requirement of the local public distribution system are handed over to the Food Corporation of India as a part of central pool stock,” an food ministry official told FE.
The Chhattisgarh government in 2023-24 season (October-September) had announced procurement of 20 quintal of paddy per acre and input subsidy of Rs 9000/acre under the Rajiv Kisan Nyay Yojana scheme to farmers.