Cabinet may overhaul crop procurement scheme today

Ahead of the 2019 general elections, the Narendra Modi govt is getting set to overhaul crop procurement. The new proposed mechanism may be discussed by the Cabinet today, ET Now has learnt .

Prime Minister Narendra Modi had promised a new crop procurement scheme in July, i.e. shortly after announcing what he described as India’s highest ever hike in the minimum support price (MSP) for 22 crops.

The Cabinet may approve a new mechanism that will be crop specific. This will mark a significant departure from the current mechanism, under which the crops are purchased by the government and the MSP price is transferred to farmers' account through Direct Benefit Transfer.


The new mechanism is likely to cost the exchequer nearly Rs 40,000 crore and come into effect for the upcoming harvest of the Kharif season. These are the likely contours:

• Price deficit or Bhavantar scheme- Under this scheme, the government compensates the farmer with the difference between market price and minimum support price.

• Private procurement and stockists Scheme: The government will incentivise private players for purchasing crops from farmers at the MSP.

The above mentioned schemes are likely to be rolled out for procurement of oil seeds.

Another important addition to the new procurement mechanism is that nutri-cereals, for example millets and minor coarse grains, will now be procured by the Food Corp of India all across the country. The FCI will continue following the existing process for procuring wheat and rice.

For pulses as well, the government will stick to the current method, Price Support System, under which purchases are made at the MSP.