Mains – 20th Oct 23

PM Pranam Scheme – PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth

Why in News?

It was announced in 2023-24 Budget and was recently approved by Cabinet Committee on Economic Affairs. The scheme aims to reduce the use of chemical fertilizers by incentivizing states to adopt alternative fertilizers.

Objective of the Scheme

• Encourage the balanced use of fertilizers in conjunction with biofertilizers and organic fertilizers.
• It also intends to reduce the subsidy burden on chemical fertilisers, which is expected to increase to Rs 2.25 lakh crore in 2022-2023, which is 39% higher than the previous year’s figure of Rs 1.62 lakh crore.
• To generate awareness of regenerative agriculture.

Financing

• The scheme will not have a separate budget and will be financed by the savings of existing fertiliser subsidy under schemes run by the Department of fertilisers.
• 50% subsidy savings will be passed on as a grant to the state that saves the money.
• 70% of the grant provided under the scheme can be used for asset creation related to technological adoption of alternate fertilisers and alternate fertiliser production units at village, block and district levels.
• The remaining 30% grant money can be used for incentivising farmers, panchayats, farmer producer organisations and self-help groups that are involved in the reduction of fertiliser use and awareness generation.

Fertiliser usage in India

• The Department of Agriculture and Farmers Welfare assesses the requirement of fertilisers each year before the start of the cropping season, and informs the Ministry of Chemical and fertilisers to ensure the supply.
• Most of the fertiliser is required in Kharif season due to the fact that kharif season (June-October) is critical for India’s food security, accounting for nearly half the year’s production of foodgrains, one-third of pulses and approximately two-thirds of oilseeds.
• The total requirement of four fertilisers — Urea, DAP (Di-ammonium Phosphate), MOP (Muriate of potash), NPKS (Nitrogen, Phosphorus and Potassium) — increased by 21% between 2017-2018 and 2021-2022, from 528.86 lakh metric tonnes (LMT) to 640.27 LMT.
• Due to increased demand for fertiliser in the country over the past 5 years, the overall expenditure by the government on subsidy has also increased.

Fertiliser Subsidy in India

• In light of the increased demand, the government has also been increasing the subsidies it provides for chemical fertilisers. In the Union Budget 2021-22, the government had budgeted an amount of Rs 79,530 crore, which increased to Rs 1.40 lakh crore in the revised estimates (RE). However, the final figure of fertiliser subsidy touched Rs 1.62 lakh crore in 2021-22.
• In the current financial year (2022-23), the government has allocated Rs 1.05 lakh crore, but the fertiliser Minister has stated that the fertiliser subsidy figure could cross Rs 2.25 lakh crore during this year.
• PM PRANAM, which seeks to reduce the use of chemical fertiliser, will likely reduce the burden on the exchequer.

Open Market Sale Scheme

Why in news?

States have been looking at alternative ways of procuring wheat and rice in the aftermath of the Food Corporation of India’s (FCI) quantity restrictions followed by the refusal to allow states to procure the two food grains through its Open Market Sale Scheme (OMSS).

Open Market Sale Scheme

• At first, procurement of food grains like wheat and paddy for the central pool happens in Rabi and Kharif marketing seasons by the FCI and State corporations according to procurement estimates finalised by the government of India before the seasons. These purchases happen as per the Minimum Support Price.
• From the central pool, the government has to set aside wheat and rice for the 80 crore beneficiaries of free foodgrains under the National Food Security Act (NFSA), maintain a buffer stock, and have a marketable surplus.
• Under the Open Market Sale Scheme, the FCI from time to time sells (through e-auctions) surplus food grains from the central pool especially wheat and rice in the open market to traders, bulk consumers, retail chains and so on at pre-determined prices. This is done to enhance the supply of grains especially during the lean season and thereby to moderate the general open market prices especially in the deficit regions.
• Usually, states are also allowed to procure food grains through the OMSS without participating in the auctions, for their needs beyond what they get from the central pool to distribute to NFSA beneficiaries.

Recent Changes

• The OMSS underwent a recent revision with a focus on limiting the quantity that a single bidder can purchase in a single bid.
• Previously, the maximum allowed quantity per bid was 3,000 metric tonnes. However, it has now been reduced to a range of 10-100 metric tonnes.
• The aim of this change is to promote wider participation by accommodating small and marginal buyers.

Discontinuation of OMSS Sales to States:

• The Centre decided to discontinue the sale of rice and wheat from the central pool to state governments under the OMSS.
• Additionally, private bidders are no longer allowed to sell their OMSS supplies to states.
• The rationale behind this decision is to control inflationary trends and maintain adequate stock levels in the central pool.
• Karnataka and Tamil Nadu have criticized the Centre’s decision.