New Delhi: Giving direct income support (DIS) to farmers — similar to what Telangana recently launched — may be a better option than the price deficiency payment (PDP) scheme or higher minimum support price (MSP) to address farm distress, according to a new study.
Paying higher MSP based on cost-plus pricing would lead to market distortion. PDP schemes such as Bhavantar Bhugtan Yojana (BBY), which was in force in Madhya Pradesh till March 2018, had only a limited impact as it covered less than a quarter of the produce, said a working paper authored by noted agricultural economist Ashok Gulati and his colleagues at the Indian Council for Research on International Economic Relations (ICRIER).
Positives of DIS
DIS is easier to implement, more transparent, equitable and crop-neutral. China also implements a sort of DIS, which it calls comprehensive input subsidy scheme that gives an aggregate input support to the farmer on a per acre basis, said the authors.
They tabulated that if it is implemented across the country at ?10,000 per ha, the total funds required could be in the range of ?1.97 lakh crore.
But the bill could come down significantly if the scheme were to exclude farmers whose wheat and rice are procured by government agencies; sugarcane growers who are paid by sugar mills and those farmers growing non-MSP crops.
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