MP’s Bhavantar Bhugtan Yojana

The scheme was launched by the Madhya Pradesh government in October 2017 after sustained protests by the farmers over falling farm prices. The aim of the scheme is to primarily support farmers in case of distressed sales in the Mandis which fetches them prices below the Minimum support prices (MSP).

Rationale for introducing the scheme

Like all other states, MP government also announced MSP for 25 crops. If the farmers found the market prices to be lower than the MSP then they could exercise the option to sell at MSP to the government. But the government mainly procured wheat and rice under public distribution system. Also the government’s procurement system was inefficient and unorganized forcing the farmers to do distress sales. Thus, BBY was launched to plug some of these loopholes and ensure a reasonable price to the farmers.

What is BBY

Under the scheme the farmers will be compensated the difference between the MSP and the price at which the farmer sold his produce in the mandi called as model price. The model price will be calculated by taking the average price of the commodity in Madhya Pradesh and two other states where the crop is grown. To avail the benefits of the scheme farmers were required to register for the scheme and sell their produce at registered agricultural markets. Currently, BBY is launched for 8 crops: Soybean, Groundnut, Til, Ramtil, Maize , Moong, Urad ,Tuar Daal.

Let us understand the scheme with the help of an example: If MSP for maize is Rs 3000 per quintal and the modal rate is Rs2500 per quintal, if a farmer sells the crop at Rs2600per quintal in a mandi, the government will pay out Rs400 for every quintal sold directly to the farmer’s bank account. However, if the crop is sold at Rs2200 per quintal, the state will transfer only Rs500 per quintal of produce sold, or the difference between MSP and the modal price.

Analysis

Conceptually the scheme will ensure that the farmer gets reasonable price for his produce. Moreover the difference is directly credited into farmer’s bank account. The financial burden on the government will also be less as it has to pay only the difference and not the entire MSP. But the farmers seemed to be unhappy with the scheme due to delay in payment by government which has substantial effect on the small farmers as they depend on the current crop payment to meet their day to day needs. Besides this the purpose with which the scheme is launched i.e to get at least MSP for their crop seems to be defeated. This is because now the traders have started colluding to bring down an artificial slump in the prices. Thus the farmers are effectively getting rate lower than MSP as explained in above example. For example-The prices of the soyabean are reported to be lowest in the mandi over the last five years. This is attributed to cartelization of the soya bean traders but many claim this is due to increase in cheap imports and partial effects of demonetization.

Conclusion

The government move is well intentioned and with the aim to bring about real changes in the situation of the farmers however its benefits can only be calculated after some time.