ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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No Breather for Food Subsidy Bill

Farm support payment schemes, aimed at compensating farmers when market prices fall below a certain predetermined price level, work differently in different countries. The article “Price Deficiency Payments and Minimum Support Prices: A Study of Selected Crops in India”  (EPW, 19 May 2018) by T Haque and P K Joshi had recommended schemes similar to the Price Loss Coverage programme of the United  States as an alternative to the agricultural minimum support price programme in India. This article debates the inferences made, in particular, why price deficiency payment schemes such as the Bhavantar Bhugtan Yojana, will not reduce the food subsidy bill.

Agricultural price support schemes, especially the minimum support prices (MSPs), have been a contentious issue in India. In this context, the Madhya Pradesh (MP) government’s experiment with the Bhavantar Bhugtan Yojana (BBY) between October 2017 and September 2018—a price deficiency payment scheme wherein farmers received the difference money as a government guarantee when they failed to garner the minimum price for the crop they produced—received much attention as a potentially viable alternative of the MSPs.

Though the pilot has been rolled back by the MP government towards the end of 2018, the significance of such alternative strategies in the overall discourse on agricultural price support policy will always remain pertinent, and so will be any critical discussion on this issue. In the first place the BBY appears to be a rather problematic mix of two safety net payment programmes implemented by the United States (US) government—namely the Price Loss Coverage (PLC) and the Agriculture Risk Coverage–County (ARC-CO).

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