Central Idea

In a bid to empower small and marginal farmers and break the influence of traders in price determination, the Indian government is poised to launch the PM-Kisan Bhai (Bhandaran Incentive) scheme.

PM-Kisan Bhai Scheme

This scheme aims to incentivize farmers to retain their produce for a minimum of three months post-harvest, granting them the autonomy to decide when and where to sell their crops.
It seeks to break the monopoly of traders in setting crop prices, giving farmers greater control over their produce.
This initiative grants farmers the autonomy to decide when to sell, in contrast to the current practice where most crops are sold around harvest, typically spanning 23 months.

Initial Rollout: The scheme may be piloted in states such as Andhra Pradesh, Assam, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, and Uttar Pradesh.
Two Key Components:

Warehousing Rental Subsidy (WRS): Small farmers and farmer producer organizations (FPOs) can avail a WRS benefit of ₹4 per quintal per month for a maximum of three months, irrespective of warehousing charges.
Prompt Repayment Incentive (PRI): The government proposes to extend a 3% additional interest subvention under the Kisan Credit Card (KCC) scheme for farmers pledging their produce and obtaining loans at subsidized interest rates.

The government has proposed that the storage incentive will be provided for a maximum of three months.
Besides, produce stored for 15 days or less will not be eligible for the subsidy.
The incentive will be calculated on day to day basis.

Resisting Price Dictation: With monetary support for storage during the harvest season, farmers can refuse prices dictated by buyers.
Access to a Wider Market: Promoting e-Negotiable Warehouse Receipt (eNWR) trade through platforms like e-National Agriculture Market (e-NAM) will connect farmers to a broader range of buyers across the country.

Need for such a scheme

Pledge Finance Facility: While a pledge finance facility is currently available to farmers, its effectiveness is limited due to high carryover costs on farmers and credit risk to bankers.
Incentivizing Scientific Warehousing: The scheme aims to incentivize the storage of farmers’ produce in scientifically built warehouses, reducing interest rates on pledge finance.