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PM-AASHA to provide MSP assurance to Farmers

Chander Mohan
Chander Mohan

The Union Cabinet chaired by Prime Minister Narendra Modi has approved a new Umbrella Scheme “Pradhan Mantri Annadata Aay SanraksHan Abhiyan’ (PM-AASHA), which aims at ensuring remunerative prices to the farmers for their produce as announced in the Union Budget 2018. The new Umbrella Scheme includes the mechanism of ensuring remunerative prices to the farmers and is comprised of:

  • Price Support Scheme (PSS),
  • Price Deficiency Payment Scheme (PDPS)
  • The pilot of Private Procurement & Stockist Scheme (PPPS).

The other existing schemes of Department of Food and Public Distribution (DFPD) for procurement of wheat, paddy and nutri-cereals/coarse grains and of Ministry of Textile for jute and cotton will be continued to provide Minimum Support Price (MSP) to farmers for these crops. The Union Cabinet has also decided that participation of private sector in procurement operation needs to be piloted so that on the basis of learning, the ambit of private participation in procurement operations may be increased.

It was decided that for oilseeds, states have the option to roll out Private Procurement Stockist Scheme (PPSS) on a pilot basis in the selected district and Agricultural Produce Market Committee (APMCs) of district involving the participation of private stockiest. The pilot districts and selected APMCs of the district will cover one or more crop of oilseeds for which MSP is notified. Since this is akin to PSS that involves physical procurement of the notified commodity, it shall substitute PSS/PDPS in the pilot districts. 

The selected private agency shall procure the commodity at MSP in the notified markets during the notified period from the registered farmers in consonance with the PPSS guidelines, whenever the prices in the market fall below the notified MSP and whenever authorized by the states and union territories to enter the market and maximum service charges up to 15 percent of the notified MSP will be payable. 


The Cabinet has decided to give additional government guarantee of Rs.16,550 crore making it Rs. 45,550 crore in total. In addition to this, budget provision for procurement operations has also been increased and Rs. 15,053 crore is sanctioned for PM-AASHA implementation. 
In Price Support Scheme (PSS), physical procurement of pulses, oilseeds and Copra will be done by central nodal agencies with a proactive role of state governments. It is also decided that in addition to National Agricultural Cooperative Marketing Federation of India (NAFED), Food Cooperation of India (FCI) will take up PSS operations in states. The procurement expenditure and losses due to procurement will be borne by Central government as per norms. 
Welcoming the decision taken by the government, Ajay Kakra, Leader - Food and Agriculture, PwC India said, "The cabinet approval of crop procurement policy is a step towards improving the economic condition of the agricultural sector and the farming community. The policy also provides flexibility to the states for crop-wise procurement and inclusion of private sector for procurement, changing the way the procurement is being done in India." 

"The new crop procurement policy looks at stablizing the commodity markets by providing options to the state governments when the market prices falls below MSP. The adoption of crop specific procurement mechanism will also help the Indian farmers," Kakra added. 

Under Price Deficiency Payment Scheme, it is proposed to cover all oilseeds for which MSP is notified. In this direct payment of the difference between the MSP and the selling/modal price will be made to pre-registered farmers selling his produce in the notified market yard through a transparent auction process. All payments will be done directly into registered bank accounts of the farmers. This scheme does not involve any physical procurement of crops as farmers are paid the difference between the MSP price and sale/modal price on disposal in notified market. The support of central government for PDPS will be given as per norms. 

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