SPARK OF HOPE – PDPS

DEEPTHI C S

Oilseeds require large warehouse space and working capital and also crops like groundnut tend to
rot due to moisture , before the stock is liquidated . So procurement of oilseeds under MSP by the
government was not feasible . That is why the Central Government introduced the concept of PDPS
( Price Deficiency Payment System) in oilseed crops . In this system farmers are paid the difference
amount of market price and MSP announced without physical procurement . The centre has also
assured that it will support the States and take the financial burden of the scheme for up to 25
percent of production and only up to 25 percent of MSP . The cost of any benefit beyond this limit
has to be borne by the States offering it . Madhya Pradesh state had implemented PDPS under
Bhavantar Bhugtan Yojana last year which has got good response with minimal drawbacks .

The price compensation under PDPS to a farmer will work this way :

 If the sale price of the crop is equal to the MSP , then no compensation
 If the sale price of the crop is less than MSP but higher than the modal price , then the
difference between the MSP and actual selling price will be paid to the farmer
( Modal price : The weighted average price of the crop in the particular mandi and the same
crop’s price in agmarknet portal of two or more mandis notified by the State )
 If the sale is below the modal price , the compensation will be admissible to the extent of
difference between the MSP and modal price .
 If the modal price is above the MSP for the crop , then no compensation will be paid even if
the farmers sells his produce at a lower price.

Crops covered : groundnut , soyabean , sunflower , sesamum , niger seed , rapeseed ,

safflower and toria .

ADVANTAGE OF PDPS :

 There is no requirement of physical procurement of food crops which will lead to storage
problems
 PDPS will keep India’s food subsidy bill under check
 More farmers will be actually benefited from price support

DISADVANTAGE OF PDPS :

 Under BBY in Madhya Pradesh , Ground level checks reveal that traders connive with each
other and depress prices at mandis . They force the farmers to sell at lower prices and
pocket the compensation from the Government . Many small farmers suffered a lot with
lower selling price for their crops without compensation prices .

BOTTOMLINE

PDPS is a good initiative by the Government compared to MSP which has faced heaps of flaws unless
checked at the ground level suspicious developments .