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PM-AASHA- 1.0

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What is PM-AASHA?

The government has taken a significant stride in its efforts to support farmers through the approval of the comprehensive scheme known as Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA). This initiative is primarily designed to ensure that farmers receive fair and profitable prices for their agricultural produce, marking an unprecedented move by the government.

This scheme is anticipated to work in conjunction with the enhanced Minimum Support Price (MSP), which, in turn, will contribute to increasing the income of farmers. This will be accomplished through a robust procurement system that is closely coordinated with the various state governments.

In a significant boost to the government’s pro-farmer endeavors and as a testament to its dedication to the welfare of those who feed the nation, this program will play a pivotal role in safeguarding the income of farmers. The government has already implemented a policy of setting MSP for Kharif crops at a rate that is 1.5 times the cost of production. It is expected that this increase in MSP will translate into higher incomes for farmers thanks to a well-organized procurement mechanism that works in tandem with state governments.

Components of PM-AASHA

PM-AASHA includes the Price Support Scheme (PSS) with modifications, along with the introduction of new schemes like the Price Deficiency Payment Scheme (PDPS) and the Private Procurement and Stockist Scheme (PPSS). The PM-AASHA Scheme comprises the following components:

• Price Support Scheme (PSS): Under the Price Support Scheme, the Central Nodal Agencies, with support from state governments, will undertake the procurement of pulses and oilseeds. The Food Corporation of India, in collaboration with NAFED, will establish and manage the PSS, and all associated expenses will be covered by the Central Government.
• Price Deficiency Payment Scheme (PDPS): This scheme covers all oilseeds designated for Minimum Support Price (MSP). Registered farmers will receive direct payments equal to the difference between the MSP and the selling price. These payments will be deposited into the farmers’ registered bank accounts. Essentially, no physical procurement of crops will occur; instead, farmers will receive compensation based on the MSP-sales price differential.
• Pilot of Private Procurement & Stockist Scheme (PPSS): Under the Pilot of PPSS, the private sector will participate in procurement activities. States have the option to implement this scheme on a trial basis within selected Agricultural Produce Market Committees (APMCs), with the active involvement of the private sector.

Objectives of PM-AASHA

For PSS

The Price Support Scheme has several key objectives, which can be summarized as follows:

• Income Stability Assurance: The scheme’s primary goal is to provide farmers with a sense of income stability by ensuring a minimum price for their produce. This protection helps shield farmers from the adverse effects of price fluctuations driven by market dynamics.
• Promotion of Increased Production: By offering a guaranteed minimum price, the scheme serves as an incentive for farmers to increase their production. Farmers are encouraged to grow more, knowing that they can achieve a certain level of profitability. This expanded production contributes to the nation’s overall food security.
• Mitigating Market Price Volatility: The Price Support Scheme functions as a safeguard against extreme market price volatility. It serves to alleviate the risks faced by farmers and helps maintain stability in the supply of agricultural commodities within the market. This, in turn, benefits both farmers and consumers. 

For PDPS

The objectives of the Price Deficiency Payment System (PDPS) can be articulated as follows:

• Securing Minimum Support Price (MSP) for Farmers: The primary aim of PDPS is to secure a minimum support price (MSP) for farmers, ensuring that they receive a fair and guaranteed price for their crops.
• Relieving Government Procurement Agencies: PDPS is designed to alleviate the burden on government procurement agencies by shifting the responsibility of price support to a more market-oriented mechanism.
• Ensuring Fair Compensation for Farmers: One of the key goals is to guarantee that farmers receive equitable compensation for their agricultural produce, reducing their vulnerability to price fluctuations.
• Boosting Farmers’ Income and Reducing Middlemen Dependence: PDPS aims to increase the income of farmers and reduce their reliance on intermediaries, enabling them to have more direct control over their produce and earnings.
• Encouraging Market-Centric Agricultural Reforms: The system is geared toward promoting agricultural reforms that align with market dynamics, encouraging farmers to participate in competitive market environments.
• Enhancing Price Stability and Reducing Market Price Fluctuations: PDPS seeks to contribute to price stability within the market by mitigating extreme price volatility, thereby benefiting both farmers and consumers.

For PPSS

The Private Procurement & Stockist Scheme has several key objectives, which can be summarized as follows:

• Testing Private Sector Involvement: The primary aim of PPSS is to evaluate the feasibility of engaging private agencies in the procurement operations at Minimum Support Price (MSP). Historically, procurement operations for MSP have been conducted by the public sector and cooperatives. PPSS seeks to determine if private sector participation is workable and beneficial.
• Utilizing Private Sector Expertise: The scheme recognizes the need to leverage the expertise and efficiencies of the private sector in procurement activities. By doing so, it aims to improve the effectiveness and reach of MSP-related operations.
• Reducing Government Expenditure: One of the objectives is to assess whether private sector involvement can support farmers without placing an additional financial burden on the government. A well-structured and closely monitored private sector intervention should serve the welfare of farmers without requiring excessive government funding.
• Addressing Regional Demand Imbalances: PPSS is designed to address situations where there are production surpluses in certain regions but insufficient effective demand. Private sector-led procurement operations can stimulate demand and have a positive influence on local markets.
• Encouraging Value Addition: In regions where PPSS is implemented, private traders are encouraged to establish warehouses and processing mills. This approach promotes value addition, ensuring that processed agricultural products, rather than raw produce, are transported. This can add value to the agricultural supply chain and benefit farmers.

Choosing a Particular Component

• States and Union Territories (UTs) can choose either PSS or PDPS for specific oilseeds crops for the entire state during a given procurement season. Pulses and Copra are procured under PSS. Only one scheme, either PSS or PDPS, can be operational in one state for a particular commodity.
• States have the option to launch PPSS on a pilot basis in districts or selected Agricultural Produce Market Committees (APMCs), involving private stockists for oilseeds.
• Wheat, paddy, and coarse grains are procured under the existing schemes of the Department of Food and Public Distribution, and cotton is procured under the existing schemes of the Ministry of Textiles.
• The government sets MSP for 22 mandated crops, which include paddy, jowar, bajra, maize, ragi, arhar, moong, urad, groundnut-in-shell, soyabean, sunflower, sesamum, nigerseed, cotton, wheat, barley, gram, masur (lentil), rapeseed/mustard, safflower, jute, and copra.
• Additionally, MSPs for Toria and de-husked coconut are determined based on the MSPs of rapeseed/mustard and copra, respectively.

Functioning of PM-AASHA

• MSP Announcement: The scheme initiates by announcing Minimum Support Prices (MSPs) for a range of crops, ensuring that farmers receive remunerative prices for their produce.
• MSP as the Price Floor: These MSPs serve as the minimum guaranteed price, below which crop procurement does not take place.
• Procurement Agencies: Two primary government agencies, namely the Food Corporation of India and NAFED, are responsible for conducting procurement operations under the scheme. State governments may also participate in procurement activities.
• Procurement Centers: Procurement centers are established in various locations, including grain markets, market yards, and villages within farming clusters. These centers directly purchase crops from farmers at the officially announced MSPs.
• Direct Payment to Farmers: Farmers receive immediate payment directly into their bank accounts after selling their crops at the notified MSPs.
• Eligible Crops: The scheme focuses on major crops such as paddy, wheat, pulses, and oilseeds, with the specific list of eligible crops for MSP and procurement varying from state to state.
• Cost Sharing: The government covers the difference between the economic cost of procuring crops and their MSPs, with this cost being shared between the central and state governments.
• Utilization of Procured Grains: The crops procured under the scheme play a crucial role in fulfilling the requirements of the National Food Security Act and other welfare schemes.
• Support for Small and Marginal Farmers: The PM AASHA scheme primarily emphasizes procurement from small and marginal farmers, who are often the most vulnerable in the agricultural sector. This approach aims to benefit these specific farmer categories.

Mains Question

Discuss the impact of the PM-AASHA scheme on agricultural income, market stability, and farmer welfare in the context of enhancing Minimum Support Prices (MSP) in India.