The Commission for Agricultural Costs and Prices (CACP) — the Centre’s main panel to fix the minimum support price (MSP) of crops — in its non-price recommendations to the government has suggested capping the number of subsidised fertiliser bags each farmer can avail of to handle the subsidy burden.
It also sought to bring urea under the nutrient-based subsidy regime.
The commission has come down heavily on the PM-AASHA scheme meant for procurement of oilseeds and pulses in the event of a price fall, saying the performance of PM-AASHA has not been very encouraging due to lack of interest from states.
The commission has also advocated limiting paddy procurement from those states which announce bonuses over MSP or levy additional cess and surcharges.
The recommendations are mostly advisory in nature and not mandatory on the incumbent government for implementation. In the past, several such non-price recommendations of the commission have not been implemented.
Meanwhile, under PM-AASHA, CACP said states have the option to roll out a price deficiency payment system for oilseeds and Private Procurement and Stockist Scheme for oilseeds on a pilot basis in districts and selected agricultural produce market committees of the district but states have not implemented the schemes.
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It said that the allocation for PM-AASHA has reduced from Rs 1,500 crore in Union Budget 2019-20 to Rs 500 crore in 2020-21, Rs 400 crore in 2021-22, which further dropped to Rs 1 crore in 2022-23, and allocation in the 2023-24 (Budget Estimates) is only Rs 1 lakh.
“Therefore, there is a need to review the PM-AASHA scheme,” CACP said.
On capping the number of subsidised fertiliser bags each farmer can avail of, the commission reasoned that once that is done, the resources saved through such a process could be used to invest in agriculture research and development and infrastructure development.
On states levying various charges, including market fees, rural development cess, commission, etc on rice procurement, resulting in high procurement incidentals, the commission said it leads to a high economic cost of grain and restricts participation of the private sector.
It suggested that apart from disincentivising procurement from such states, the charges and levies should be fixed amount-specific (per quintal) instead of ad valorem (as a percentage of MSP).
In the 2022-23 kharif marketing season, Kerala and Tamil Nadu declared a bonus for paddy. Kerala paid a bonus of Rs 780 per quintal for paddy, whereas Tamil Nadu paid a bonus of Rs 75 per quintal for common grade and Rs 100 for Grade A.
“Bonus over and above MSP, especially for paddy, creates distortion in the market. This restricts the participation of private traders and prevents the scope for competition in the business,” CACP report said.
The commission also said that import duty on crops may be imposed in such a manner that the landed price of imported crops should not be below MSP.