The Union Ministry of Agriculture is planning to launch “PM Kisan Bhai (Bhandaran Incentive) Scheme”.
Key proposed features
- The scheme has two components; a government-funded Warehouse Rental Subsidy (WRS) to help farmers bear storage costs and a Prompt Repayment Incentive (PRI) to help them raise loans against stored produce at concessional rates.
- On warehouse rental subsidy, a monthly sum of ₹4 per quintal of produce is proposed to be given to all small and marginal farmers (with less than 2 hectares of land) storing produce in a warehouse and selling it through e-NAM or other licensed electronic platforms.
- The scheme proposes to pay subsidies only to farmers who store their produce for a minimum of 15 days and for a maximum period of three months.
- It will also be paid only for two crops in a year, based on 75 per cent of government estimates of productivity from two hectares of land.
- A farmer can avail of WRS on a maximum of 53 quintals of wheat, 45 quintals of rice, 38 quintals of other cereals, etc., per year. The maximum annual subsidy per farmer will thus range from ₹420 to ₹1,176.
- Both schemes can only be implemented in States which have amended their APMC Acts to declare warehouses as deemed market yards and permit electronic trading of farm produce.
- 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.
- 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.
Why this scheme?
- Small and marginal farmers in India rarely manage to secure a fair price for their produce due to two constraints. 1. they lack the resources to warehouse produce so that they can sell it at appropriate time; 2. they are unable to secure loans by pledging their output and so sell in haste to realise cash.
- This is seen as an attempt to break the monopoly of traders in deciding prices of crops. Kisan Bhai is expected to empower farmers, allowing them to retain their crops for a minimum of three months post-harvest.
- This initiative grants farmers the autonomy to decide when to sell, in contrast to the current practice where most crops are sold during the harvesting season, typically spanning 2-3 months, with traders and stockists controlling supplies throughout the off-season.
Problems with the scheme
- Selling through e-NAM limits the scope of the scheme to 1.76 crore of the 12.6 crore small and marginal farmers who are on e-NAM.
- The proposed annual subsidy is not sufficient enough to nudge farmers into exploring warehousing or e-NAM trades.
- PRI will only be offered to farmers availing finance via Kisan Credit Cards against electronic warehouse receipts and trading on eNAM/ electronic platforms.
- The lender must be compulsorily empanelled with the Warehouse Development and Regulatory Authority, to receive the subsidy.
