Costly proposition: Rush to avail Madhya Pradesh’s MSP scheme

To ensure traders in Madhya Pradesh are not able to manipulate markets too much, the state has taken prices prevalent in two other states as well to calculate a reference price.

By: ENS Economic Bureau | New Delhi | Published: February 12, 2018 12:26:16 am
demonetisation, demonetisation anniversary, narendra modi, pm modi, modi note ban, Black money, Black money demonetisation, arun jaitley, GST, GST rate cut, farmers income, agricultural employment, agriculture, agricultural shift, agricultural incomes While MP has traditionally had lower prices than other states for most crops, after the implementation of the scheme in September 2017, the price difference has risen.

The Centre is yet to work out the modalities of its MSP-based deficiency payments scheme, but if Madhya Pradesh’s just-concluded Bhaavantar Bhugtaan Yojana (BBY) is anything to go by, the scheme will be a costly one.

Market arrivals of crops trying to avail the scheme have shot up by four times in the case of urad — as compared to the previous year where there was no such scheme — and 50 per cent each in the case of maize and soyabean. Compared to 2016-17 when 3.6 lakh tonne of maize came to the market for sale, it was 5.5 lakh tonne in 2017-18, numbers for urad rose from 1.5 lakh tonnes to 6.3 lakh tonne and from 12.6 lakh tonne to 18.8 lakh tonne for soyabean.

The Madhya Pradesh government has spent close to around Rs 2,000 crore for the scheme this year. Since only a small number of farmers are still registered for it, the numbers will increase next year. Around a third of urad production was registered for the scheme in Madhya Pradesh, less than a fifth in the case of soybean, a tenth for maize, and a twentieth for groundnut.

While MP has traditionally had lower prices than other states for most crops, after the implementation of the scheme in September 2017, the price difference has risen. Urad prices in MP were 93 per cent of those in Rajasthan in FY17 but this fell to 77 per cent in FY18, and from 65 per cent to 57 per cent when a comparison is made with Uttar Pradesh. Prices of maize were 91 per cent of those prevailing in Karnataka in 2016-17 and this fell to 88 per cent in 2017-18. Prices of maize were 6 per cent higher in comparison with those in Maharashtra in 2016-17 but were 4 per cent lower in 2017-18.

To ensure traders in Madhya Pradesh are not able to manipulate markets too much, the state has taken prices prevalent in two other states as well to calculate a reference price. FE

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