PM-AASHA: Price Support Scheme (PSS), Price Stabilisation Fund (PSF)

PM-AASHA will now have the components of Price Support Scheme (PSS), Price Stabilisation Fund (PSF), Price Deficit Payment Scheme (POPS) and Market Intervention Scheme (MIS).

The Union Cabinet on Wednesday took two pro-farmer decisions, announcing an investment of over Rs 59,000 crore that included providing better prices for farm produce.

• The two decision are: the continuation of the PM-AASHA (Pradhan Mantri Annadata Aay SanraksHan Abhiyan) scheme with an outlay of Rs 35,000 crore, and Rs 24,474.53 crore subsidy on phosphatic and potassic (P&K) fertilisers for the rabi season of 2024-25.
• “The government approved the continuation of schemes of Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA) to provide remunerative prices to farmers and to control price volatility of essential commodities for consumers,” an official statement said.
• The total financial outgo will be Rs 35,000 crore during the 15th Finance Commission Cycle up to 2025-26, it added.

The government also converged the Price Support Scheme (PSS) and Price Stabilization Fund (PSF) schemes in PM-AASHA to serve the farmers and consumers more efficiently.

Under the PSS, the procurement of notified pulses, oilseeds and copra at MSP will be 25 per cent of national production from the 2024-25 season onwards. This would enable states to procure more of these crops at MSP from farmers to prevent distress sale.

The Centre also renewed and enhanced the existing government guarantee to Rs 45,000 crore for procurement of notified pulses, oilseeds and copra at MSP.

This will help in more procurement of pulses, oilseeds & copra whenever prices fall below MSP in the market.

• In order to encourage the states to come forward for implementation of Price Deficit Payment Scheme (PDPS) as an option for notified oilseeds, the coverage has been enhanced from the existing 25 per cent of state production of oilseeds to 40 per cent, while the implementation period has also been extended from 3 months to 4 months for the benefit of farmers.
• The cabinet also approved Rs 24,474.53 crore subsidy on phosphatic and potassic (P&K) fertilisers for the rabi season of 2024-25 to ensure supply of crop nutrients to farmers at subsidised and affordable rates.
• “The tentative budgetary requirement for rabi season 2024 would be approximately Rs 24,475.53 crore,” an official statement said.
• The government is making available 28 grades of P&K fertilisers to farmers at subsidized prices through fertiliser manufacturers/importers.

The subsidy would be provided to fertiliser companies as per approved and notified rates of N (nitrogen), P (phosphorus) and K (potash) so that fertilisers are made available to farmers at affordable prices, it added.

1. Price Support Scheme (PSS)

The Price Support Scheme (PSS) is designed to protect farmers by ensuring that they receive a minimum support price (MSP) for their crops in case of a market price drop. Under this scheme, the government intervenes in the agricultural market by purchasing certain crops at MSP when market prices fall below the prescribed MSP.

Key Features:

• Procurement at MSP: The government procures specific crops from farmers at MSP to ensure they get remunerative prices.
• Crops Covered: Traditionally, crops like pulses, oilseeds, and cotton are covered under the PSS. These crops are procured through central nodal agencies like the National Agricultural Cooperative Marketing Federation of India (NAFED) and Cotton Corporation of India (CCI).
• Financial Support: The central government provides a guarantee for losses incurred by agencies if they are unable to sell the procured stock at a profit.

Objective:

• Protect farmers from distress sales during periods of price crashes in the market.
• Ensure that farmers receive at least the MSP announced by the government for covered crops.

2. Price Stabilisation Fund (PSF)

The Price Stabilisation Fund (PSF) is aimed at controlling and stabilizing the prices of essential commodities, particularly horticultural and agricultural products such as onions, potatoes, and pulses. The objective is to cushion consumers from sharp price fluctuations and manage inflation by intervening in markets.

Key Features:

• Fund Management: The central government, through the PSF corpus, provides financial assistance to agencies for procurement, distribution, and storage of essential commodities.
• Intervention in Price Fluctuations: When prices rise sharply, the government releases buffer stocks into the market to stabilize prices. Similarly, it procures produce from farmers when prices fall too low, preventing farmer distress.
• Crops Covered: Initially focused on onions and potatoes, the scheme has expanded to include pulses and other essential commodities.

Objective:

• Reduce price volatility of essential commodities.
• Create a buffer stock of key commodities to be released when needed to stabilize market prices.
• Protect consumers from high prices and farmers from low prices.

3. Price Deficiency Payment Scheme (PDPS)

The Price Deficiency Payment Scheme (PDPS), also known as the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA), is a system where the government compensates farmers for the difference between the Minimum Support Price (MSP) and the actual market price they receive, without direct procurement of the produce.

Key Features:

• Price Deficiency Payment: Under this scheme, if the market price of a commodity falls below its MSP, the government pays the difference to the farmers.
• Direct Benefit Transfer (DBT): Payments are made directly to the farmer’s bank account under the Direct Benefit Transfer (DBT) mechanism.
• No Physical Procurement: Unlike the PSS, the government does not procure the crop physically. Farmers sell their produce in the open market, and the difference is covered through a direct payment by the government.
• Crops Covered: It is mainly implemented for oilseeds and other crops as per need.

Objective:

• Ensure that farmers get MSP for their produce without creating the need for the government to procure large stocks.
• Reduce the need for storage facilities and market intervention.
• Protect farmers from financial losses due to a fall in market prices.