Is the Price Deficiency Payment model a viable alternative to physical procurement for crops beyond oilseeds? Discuss.

The Price Deficiency Payment Scheme (PDPS) under PM-AASHA pays farmers the gap between MSP and the market price without buying their crop. The gap payment is capped at 15% of MSP and paid by DBT (direct benefit transfer), and the scheme now covers 40% of state oilseed output [1]. Telangana is drought-hit and has demanded 100% procurement of maize and jowar [2]. That makes it timely to ask whether PDPS can travel beyond oilseeds. It can, but only as a complement to physical procurement.

Case for extending PDPS

• Lower fiscal and storage burden: nothing is bought, stored or disposed of [1]. This suits maize, a feed crop that the PDS uses little.
• Wider reach: physical buying is limited by centres and staff. PM-AASHA actually spent only ₹5,438 crore in 2024-25 [3]. A registration-plus-DBT system scales more easily.
• Market neutrality: the produce stays in private trade, so open-ended procurement does not lock in cropping patterns.
• Matches reform pressure: the Parliamentary Standing Committee on Agriculture wants procurement of pulses and oilseeds raised from 25% to 100% of production [4]. Gap payments could deliver this assurance cheaply.

Limits to its viability

• Partial cover: the 15% ceiling [1] means that if prices fall further, the farmer still bears the rest of the loss.
• Price manipulation: once traders know the State will pay the gap, they may push down modal prices (the most common prices in the mandi).
• Infrastructure needs: PDPS needs regulated mandis, digitised land records and pre-registration. Tenants and sharecroppers risk being left out.
• No buffer stock: crops needed for food security and self-sufficiency still need physical stocks. This is why tur, urad and masoor stay under full procurement through 2028-29 [5].
• Drought blind spot: PDPS pays only on crop that is actually sold. It does little for farmers whose crop failed outright, as in Telangana's 315 of 621 drought-hit mandals [2].

Way forward

• Hybrid design: PDPS for feed and industrial crops (maize, coarse cereals outside the PDS); physical procurement for staples and pulses.
• Pilot first: begin with maize and jowar in a few states, with e-NAM-linked price discovery to reduce manipulation.
• Pair with loss-based tools: crop insurance and rural wage work for years when crops fail.

PDPS is therefore a viable, fiscally prudent tool for market-oriented crops, but it cannot replace procurement where food security or crop failure is at stake. A calibrated, crop-specific mix would give farmers income security, in line with SDG 2 (Zero Hunger), while keeping the exchequer's exposure in check.