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Bhavantar Bhugtan Yojana Vs Present MSP System | Explainer

Minimum Support Price is a form of market intervention by the Government of India to safeguard farmers from any sharp fall in farm prices.This serves the purpose of protecting farmers from distress sale and at the same time assures procurement of farm produce for Public Distribution System.

Shortcomings in present MSP scheme

However, the present system is plagued by numerous flaws despite continuous effort by Government to revamp that.

➡Only 6-8% of farmers are covered under this scheme.Studies have shown that farmers in states like Bihar, regions of Eastern U.P were not even aware of this scheme.

➡Benefits of this scheme are generally experienced by Big Farmers. As they have enough marketable surplus at disposal.

➡Poor efficiency of Food Corporation of India, the procuring agency has led to rise in operational cost.

➡Storage capacity are not raised in tune with productions, thus huge amount of grains are wasted every year.

➡ Procurements are mostly limited to cereals like wheat and Rice. The MSP announcement of other crops are hardly felt by farmers.

For weeding out of these shortcomings, Madhya Pradesh government had come up with the alternate scheme called Bhavantar Bhugtan Yojana.. The scheme was launched by Chief Minister Shivraj Singh Chouhan in October 2017 in the wake of simmering discontent among farmers in the state that led to protests in Mandsaur in June 2017.

In Bhavantar Bhugtan Yojana (Price Deficiency Payment System) government would pay difference between modal rate (the average prices in major mandis) and the MSPs.

If the selling price of a agriculture product is more than the notified price but less than the MSP, the difference between their selling price and the MSP will be deposited directly in their bank account.

If the farmer’s selling price is less than the notified price, the farmer will get the difference between the notified price and the MSP.

Benefits of Bhavantar Bhugtan Yojana

* Government will provide remuneration to the farmers if the price of the crops goes below MSP.

*Farmers will get benefits under this scheme in both Rabi and Kharif crops unlike MSP where it covered mostly only kharif crops.

* Simple and easy method to protect farmers against price crash.

*Increase in the saving of exchequer as the government would pay only differential and also save on logistics cost.

*Reduce the wastage of crops where there is lack of capacity in the FCIs.

Its inevitable that MSP has to be reformed, and the initiative by Madhya Pradesh Goverment is a welcome step in that direction. 

– Compiled by Dharini, Horticultural graduate.


Also read : NO CONFIDENCE OVER MSP HIKE ! 

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