What are the reasons for price meltdown in the ongoing rabi marketing season? Explain in brief the issues with PM-AASHA.

Published: May 27, 2019

In the ongoing rabi marketing season, most of the commodities for which the government fixes minimum support prices are being traded at 10 to 30 per cent below these rates.
Reasons for price meltdown:

  • Continuous surplus production in the last couple of years
  • Reduced global commodity prices
  • Domestic and external trade policies concerning agri-commodities are not favourable
  • Permitting imports while the domestic crops are still being marketed

Issues with PM-AASHA:

  • Physical procurement of stocks at MSPs
  • Price deficiency payment in Madhya Pradesh, and a few other states
  • The participation of private trade in the procurement and management of farm produce on a fixed-commission basis
  • The system of open-ended procurement of staple cereals, notably rice and wheat burdens exchequer with a huge cost

There is need of an export window as an outlet for surplus stocks. This can be created with an eye on boosting agri-exports. The farmers need to be incentivized to diversify their production by growing high-value crops. The objective of the scheme has to strike a balance between the farmers��interests and inflation management.

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