Niti Aayog plans alternative to minimum price system

New Delhi: The Niti Aayog has noted that excessive focus on cultivation of crops like wheat, rice and sugarcane in many procurement states, as these crops drive the minimum support price (MSP), has led to distortion of cropping patterns.

Continuous sowing of these crops has led to depletion of water resources and soil degradation. The government think tank has now suggested the introduction of the price deficiency payment system to remove this distortion in the MSP system.

Under the new system, a subsidy would be provided on other targetted produce, in case the price falls below an MSP-linked threshold. In its roadmap for the agriculture sector, the Niti Aayog has suggested this approach which will not require procurement and thereby prevent accumulation of unwanted stocks.

It would also spread price incentives to producers in all the regions and to all the crops considered important for providing price support.

Each farmer would have to register his or her crop and acreage sown with the nearest Agricultural Produce Marketing Committees (APMC) mandi. If the market price then falls below the floor price, the farmer would be entitled to a difference of around 10 per cent of the MSP-linked price that could be paid through direct benefit transfer into an Aadhar-linked bank account.

This system would help decide the quantum of the subsidy and also meet the restrictions on the subsidy imposed by the World Trade Organisation.

The Niti Aayog has advocated that the “price deficiency payment” can initially be introduced for one or two crops in a few districts of the country.

The government think tank has come up with the “price deficiency payment” concept as the MSP system has resulted in discrimination against eastern states.