News Excerpt

The government of India is planning to launch the PM-Kisan Bhai scheme.

About Scheme

• Objective: To help small and marginal farmers, who do not have capacity to hold their produce in warehouses and wait for better prices, the Centre plans to incentivise them under a scheme likely to be named PM-Kisan Bhai (Bhandaran Incentive) scheme.
• This is considered as an attempt to disrupt traders' monopoly on determining crop prices.
  • Kisan Bhai is expected to empower farmers by allowing them to keep their crops for at least three months after harvest.
• This initiative grants farmers the autonomy to sell when they want, as opposed to the current system, in which most crops are sold during the harvesting season, which normally lasts 2-3 months, with dealers and stockists controlling supplies throughout the off-season.

Pilot launch of the scheme 

• In the first phase, the scheme may be implemented on pilot basis in Andhra Pradesh, Assam, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu and Uttar Pradesh with an estimated expenditure of ₹170 crore in three years including the current fiscal year.
• In order to address these restriction, there appears to be a strong need for incentivising storing of farmers’ produce in scientifically built warehouses and further reducing the interest rate on pledge finance availed against a secured instrument of e-Negotiable Warehouse Receipts (eNWRs) through Prompt Repayment Incentive (PRI) on trading such eNWR via e-National Agriculture Market (e-NAM) platform or other registered e-trading platforms interoperable with e-NAM.
  

Major components of the scheme 

• There are two components of the proposal — Warehousing Rental Subsidy (WRS) and Prompt Repayment Incentive (PRI).
• Warehousing Rental Subsidy (WRS)
  • Small and marginal farmers as well as farmer producer organisations (FPOs) will be eligible to avail WRS benefit at ₹4 per quintal per month irrespective of rate of warehousing (storage) rental charges and also whether charged per quintal basis or area basis by warehouse operator.
  • The government has proposed that the storage incentive will be provided for a maximum period of three months.
  • Besides, the produce stored for 15 days or less will not be eligible to avail the subsidy.
  • The storage incentive will be calculated on a day to day basis.
• Prompt Repayment Incentive (PRI)
  • Under PRI, the government proposes to extend the 3 per cent additional interest subvention under Kisan Credit Card (KCC) scheme so that farmers can pledge their produce and get a loan at subsidised interest rate.
  • All KCC holder farmers will be eligible for prompt repayment incentive @3 percent lesser interest rate for three months on stocking their produce with registered warehouses, availing digital finance against eNWR and trading via eNAM.
  • Once farmers get desired monetary support for storage during harvesting season they will be in a position to refuse the buyer dictated prices.
  • By promoting e-NWR trade through online portal e-NAM, farmers will get access to a large number of buyers across the country, the official said adding, they will be able to sell the produce even if it is in a warehouse by using e-NWR on the online platform.

Challenges

• However, According to a commodity market analyst, the success of the scheme depends a lot on the response of the buyers as they will still be the key influencer on prices because of their large capital base in the agri value chain.
• If they do not show the desired interest to buy through the online portal, the farmers will again have to return to the agri market yards (mandis);
• This new beginning will be made if farmers become the decision makers.

Conclusion

Hence, the proposed scheme has a futuristic approach for the welfare of farmers but it will face some challenges which should be resolved for better implementation of the scheme. 

Prelims PYQ

Q. Under the Kisan Credit Card scheme, short-term credit support is given to farmers for which of the following purposes?  (UPSC 2020)

1) Working capital for maintenance of farm assets

2) Purchase of combine harvesters, tractors and mini trucks

3) Consumption requirements of farm households

4) Post-harvest expenses

5) Construction of family house and setting up of village cold storage facility

Select the correct answer using the code given below:

(a) 1, 2 and 5 only

(b) 1, 3 and 4 only

(c) 2, 3, 4 and 5 only

(d) 1, 2, 4 and 5

Mains PYQ

Q. Reforming the government delivery system through the Direct Benefit Transfer Scheme is a progressive step, but it has its limitations too. Comment. (UPSC 2022)