The Price Deficit Payment Scheme (PDPS) for Oilseeds: A Detailed Overview

The Indian government is dedicated to supporting its farmers and ensuring they receive fair prices for their produce. The Price Deficit Payment Scheme (PDPS) for Oilseeds, a component of the Pradhan Mantri – Annadata Aay Sanrakshan Abhiyan (PM-AASHA), is a significant step in this direction. This scheme aims to provide a safety net for oilseed farmers when market prices fall below the Minimum Support Price (MSP). This piece will explore the objectives, implementation process, and key features of the PDPS.

What is the Price Deficit Payment Scheme (PDPS)?

The PDPS is a government initiative designed to provide remunerative prices to oilseed farmers. It functions by directly compensating farmers for the difference between the MSP and the market price when they sell their produce during the harvest season. Unlike traditional procurement methods, the PDPS does not require physical procurement by government agencies. This direct payment mechanism aims to streamline the process and ensure that farmers receive fair prices efficiently.

Objectives of the PDPS

The PDPS is designed to achieve several key objectives:

• Remunerative Prices: To ensure that oilseed farmers receive prices that are at least equal to the MSP.

• Direct Payment: To provide direct payment of the price difference to farmers, eliminating intermediaries and reducing delays.

• Transparent Process: To ensure a transparent auction process in notified Agricultural Produce Market Committee (APMC) yards.

• Reduced Procurement: To minimize the need for physical procurement of oilseeds by the government, reducing storage and logistical challenges.

Key Features of the PDPS

The PDPS has several notable features:

• Applicability: The scheme is applicable to oilseeds for which MSP is declared by the Government of India. These include groundnut, soybean, sunflower, sesame, niger seed, rapeseed/mustard seed, safflower, and toria.

• State Flexibility: States and Union Territories (UTs) have the option to choose between PDPS and the Price Support Scheme (PSS) for oilseeds in a given marketing season.

• Registration: Farmers must register on a dedicated portal within a specified time to avail the benefits of the scheme.

• Direct Bank Transfer: The price difference is directly paid into the farmers’ bank accounts.

• Transparent Auctions: The scheme relies on transparent auction processes in notified APMC yards to determine market prices.

Pre-Conditions for PDPS Implementation

To effectively implement the PDPS, certain pre-conditions must be met:

• Farmer Registration: Farmers must register on the designated portal within the stipulated time frame.

• APLM Act Adoption: States/UTs are encouraged to adopt the Model “Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017.”

• State Financial Support: States/UTs must agree to bear the financial burden for procurement/support for quantities exceeding 25% of production and for price deficits more than 25% of MSP in PDPS.

Coverage of the PDPS

The PDPS has a specific scope of coverage:

• Applicable Oilseeds: The scheme is applicable for oilseeds produced in the implementing state for which MSP is announced by the Government of India.

• State/UT Choice: The implementing state/UT chooses the specific oilseeds for which PDPS will be implemented during a particular marketing season.

• Registration Period: The registration period is predefined, preferably before the crop arrives in the market.

• Implementation Period: The scheme is implemented for a fixed period of 90 days.

Scheme Design and Implementation

The PDPS is designed as an alternative to the Price Support Scheme (PSS) for oilseeds. It operates through the following steps:

• Direct Payment Mechanism: The scheme ensures direct payment of the difference between the MSP and the market/selling price to farmers.

• Transparent Auctions: Farmers sell their produce in notified APMC yards through a transparent auction process.

• Bank Account Payment: The payment is made directly into the farmers’ bank accounts after the sale and verification process.

Steps Involved in the PDPS Process

The implementation of the PDPS involves several key steps:

• State/UT Proposal: State/UT governments submit proposals for the implementation of the PDPS.

• Farmer Registration: Farmers register on the designated portal, and a Unique Registration Number (URN) is generated. They are also informed of their URN through SMS.

• APMC Arrival: Farmers bring their oilseeds to the notified APMC market.

• Quality Verification: The quality of the oilseeds is verified to ensure it meets the Fair Average Quality (FAQ) norms.

• Transparent Trading: Trading of oilseeds is carried out in conformity with FAQ norms.

• Modal Price Calculation: The state government calculates the “MODAL price” considering wholesale prices in the implementing state and other selected states.

• Deficit Payment: Deficit payments are made to farmers through their registered bank accounts within one month of the sale.

Calculation of Modal Price

The modal wholesale price is calculated as follows:

• Weighted Average: Weighted average of wholesale prices in APMCs of the implementing state, drawn from the AGMARKNET portal on a monthly basis.

• Inter-State Prices: Weighted average of wholesale prices in other notified states, as identified by the implementing state government, drawn from the AGMARKNET portal on a monthly basis.

• Average Modal Price: All these states are given weightage in the calculation of the average modal (wholesale) price, which is then published on the state’s website and the PDPS portal.

Price Compensation to Farmers

The price compensation to the farmer is determined as follows:

• No Compensation: If the sale price is at or above the MSP, no compensation is provided.

• Partial Compensation: If the sale price is below the MSP, but above the modal price, compensation is limited to the difference between the MSP and the actual sale price received by the farmer.

• Full Compensation: If the sale price is below the modal price, compensation is provided for the difference between the MSP and the modal price.

• Maximum Compensation: The farmer is paid the difference between the MSP and the monthly modal price/actual sale price, subject to a maximum of 25% of the MSP value.

Reimbursement of Expenditure

The financial liability under the scheme is shared between the Government of India and the concerned State/UT governments:

• Up to 25% Production: The Government of India bears 100% of the loss compensation up to 25% of production.

• Above 25% Production: The State/UT governments bear 100% of the loss compensation for quantities exceeding 25% of production.

• Administrative Costs: States/UTs are entitled to reimbursement of a maximum of 2% of administrative costs by the Government of India.

Monitoring Mechanism

The scheme is monitored through:

• State Level Monitoring Committee (SLMC): Chaired by the Chief Secretary, with representatives from related departments.

• District Level Monitoring Committee (DLMC): Chaired by the Deputy Commissioner/District Collector/District Magistrate, with representatives from related departments and procuring agencies.

Conclusion

The Price Deficit Payment Scheme (PDPS) for Oilseeds is a significant initiative under the PM-AASHA umbrella scheme, designed to ensure fair prices for oilseed farmers in India. By providing direct payment of the price difference and promoting transparent market operations, the scheme aims to protect farmers from distress sales and contribute to the overall stability of the agricultural economy. It reflects the government’s commitment to supporting its farmers and ensuring the sustainability of the agricultural sector.