The Decentralized Procurement Scheme was launched in 1997-98. This scheme changed the method of procurement of foodgrains in India to the central government stock. Due to the provisions of this scheme, the foodgrains for the central governments stock was collected through state governments rather than the Food Corporation of India (FCI).
All the foodgrain was procured at the Minimum Support Price(MSP) which was decided by the central government. This was done to ensure:
- A cost which covers the price of production by the farmers.
- Ensure that foodgrain is supplied to those who need it at a reasonable price via Public Distribution System (PDS) to ensure food security for all.
Objectives of Decentralised Procurement Scheme
- Increase the procurement volume at the lowest price.
- Ensuring that maximum procurement is done from the local farmers so that the farmers get the benefits of Minimum Support Price (MSP)
- Decreasing the transaction cost to increase the procurement efficiency and PDS.
- Decrease the expenditure on food subsidy.
History and Background of Decentralised Procurement Scheme
Since the 1960s Agricultural pricing framework has been under constant changes for the good. They were guided by excess demand and shortages in the availability of foodgrains. These prices have major implications in capping poverty and promoting the well-being of poor. This makes it pertinent for governments to intervene in food-grain markets and regulate the prices.
Working
- The State Government itself agrees to the straight purchase of paddy and wheat and procurement of levy rice on behalf of Government of India.
- The state government opens purchase outlets as per its requirement.
- The state government then procures all the food grain through TDS and various welfare schemes. Whenever the total allocation made by the state government is less than the requirements of the TDPS then the central government meets this shortage through the Central Pool stock.
The total expenses incurred by the State Governments on the procurement operations as per the approved costing will be agreed to be covered by the Central Government.