Madhya Pradesh government recently announced its decision to scrap the Bhavantar Bhugtan Yojana (BBY), a farmer-oriented scheme introduced by the previous government in 2017. The following day, it was clarified that the scheme would be implemented in a new form.
Bhavantar Bhugtan Yojana (BBY): Madhya Pradesh
- Background: The Bhavantar Bhugtan Yojana (BBY) was launched by the BJP government in Madhya Pradesh in October 2017 in the wake of unrest among farmers over falling prices.
- Objective: To provide a cushion to farmers when prices of crops fell below the minimum support price (MSP) announced by the central government.
- Salient features:
- Bhavantar literally means difference in rate. Under it, farmers got the difference between the MSP and the modal price (average market price in a mandi over a particular period).
- For example, if the MSP of soybean was Rs 3,050 per quintal and a farmer sold it for Rs 2,200, he would not get Rs 850 but Rs 550 if the average rate that prevailed in three mandis was Rs 2500 per quintal.
- The actual difference in the selling price and the modal rate was deposited directly in their bank accounts.
- The farmers had to register themselves at mandis. They were eligible only if they sold their produce during a particular window in the mandi where they had registered.
Other Price Deficiency Schemes in the country:
- Karnataka government is operating a price deficiency payment programme in the field of Milk.
- It has been giving a Rs 5-per-litre incentive to milk farmers over and above the rate that dairies are paying — which is again transferred separately to their accounts.
Benefits of Price Deficiency Schemes:
- Under the price deficiency payment programmes run by both MP and Karnataka, government support to producers does not involve direct market intervention. Thus, such schemes are less market-distorting.
- These schemes are also more economical as unlike physical procurement, which entails additional costs of handling and storage, Bhavantar money is directed credited into farmers’ bank accounts.
- These schemes are also more equitable than programmes requiring physical purchases and stocking. It enables covering a greater number of farmers even without a single tonne being bought by government agencies.
- The scheme has partially helped insulated Karnataka’s producers from the current crash in milk prices, which has hit their counterparts in Maharashtra and other states harder.
Criticism:
- But the Karnataka and MP schemes are not without flaws.
- The Karnataka government has used the Rs 5/litre incentive to reward not just producers, but also keep prices of milk for consumers in Karnataka lower than in other states (which was certainly not the original objective).
- There are allegations that it benefited traders more than farmers. The traders were accused of forming cartels and deliberately keeping prices low.
- Karnataka cooperative dairies are in a position to pay lower prices to farmers. This is forcing dairies in other states to slash procurement rates paid to their farmers.
- There are similar reports of traders in MP bringing down prices of soyabean, due to which farmers outside MP are suffering.
- The scheme was introduced by the Shivraj Singh Chouhan government in MP just before the Model Code of Conduct for the Assembly elections was to kick in. thus critiques called that the scheme an inducement to vote for the BJP.
- The scheme in Madhya Pradesh has been changed regularly after its implementation, which brought out its flaws and the difficulties faced by farmers.
Concluding remarks:
- According to agricultural experts, for all the risks of price manipulation by market players — which, just as in stocks, isn’t beyond regulation — there is no doubt that deficiency payments are the way forward. What is required is proper implementation of the scheme.
https://indianexpress.com/article/explained/explained-why-mp-farmer-scheme-bhavantar-bhugtan-yojana-bby-congress-bjp-is-talking-point-again-5550994/
