NITI Aayog to work on mechanism for MSP implementation

NITI Aayog to work on mechanism for MSP implementation

Government think tank NITI Aayog today said it will work out a mechanism for implementation of the Minimum Support Price (MSP) for different crops in the country. 

In light of the Finance Minister's budget announcement that NITI Aayog will develop and put in place a fool-proof mechanism, its vice chairman Rajiv Kumar presided over a consultation meeting today on mechanism for MSP implementation for different crops, the Aayog said in a statement. 

Union Minister of State for Agriculture Gajendra Singh Shekhawat along with senior officers of the Ministry of Agriculture, Ministry of Finance, NITI Aayog and Food and Public Distribution, Prime Minister’s Office and various state governments participated in the meeting. 

The MSP for 24 agricultural commodities of kharif and rabi season are announced by the government based on the recommendations of the Commission for Agriculture Cost and Prices (CACP) in the country. 

However, the Aayog noted that the procurement by central and state agencies is limited to rice and wheat and some amount of coarse cereals. 

The government also procures limited quantity of oil seed and pulses through NAFED, SFAC and some other agencies. The market intervention scheme (MIS) is implemented in case of the prices falling below the threshold level in perishable crops. Three concepts were discussed at the meeting. The first option related to market assurance scheme, which proposes procurement by states and compensation of losses up to certain extent of MSP after the procurement and price realisation out of sale of the procured produce. 

Second option related to price deficiency procurement scheme. Under this scheme, if the sale price is below a modal price then the farmers may be compensated to the difference between MSP and actual price subject to a ceiling which may not exceed 25 per cent of the MSP. No compensation would be due if modal price in neighbouring states is above the MSP. 

Third option related to private procurement and stockist scheme, which relates to procurement by private entrepreneurs at MSP and government providing some policy and tax incentives and a commission to such private entities which may be decided on the basis of transparent criteria and bidding for the empanelment of private players by the State Government to do the procurement operations. 

Shekhawat said in the statement that more than one options may be adopted by the States Government depending upon their conditions. 

Third option of private procurement and stockist scheme offered great promise as it reduces the fiscal implications for the government, involves private entities as partners in agriculture marketing and improves the competition in the market. The governments liabilities for storage and post procurement management.


By BOA Bureau