Relevance: GS Paper III (Economy: Agriculture, Pricing, and Farmers’ Welfare)

Source: The Hindu / NITI Aayog Reports (2026)

 

1. The News: Helping the Mustard Farmer

The Madhya Pradesh government has announced that it will expand its famous Bhavantar Bhugtan Yojana to include mustard farmers. Previously, it mostly covered soybean.

• Big Impact: This move is expected to help around 80 lakh farmers in the state.
• The Goal: To make sure farmers don’t lose money if market prices suddenly crash after a good harvest.

2. What is Bhavantar?

The word Bhavantar literally means “Price Difference” (Bhav = Price, Antar = Difference).

Instead of the government buying the crop and storing it in big warehouses, they let the farmer sell it to private traders in the market (Mandi).

How it works:

1. The government sets a Minimum Support Price (MSP) (e.g., ₹5,000).
2. The farmer sells the mustard in the market for a lower price (e.g., ₹4,200).
3. The government pays the difference (₹800) directly into the farmer’s bank account.

3. Why is this better than the old system?

In the traditional system, the government has to buy, transport, and store millions of tons of grain. This often leads to:

• Wastage: Grains rotting in open fields or being eaten by pests.
• High Cost: The government spends a lot on labor and storage.

Benefits of Bhavantar:

• No Storage Burden: The government doesn’t have to worry about where to keep the crop.
• Market Friendly: It keeps the local private traders active and the markets competitive.
• Direct Help: The money goes straight to the farmer’s account via Direct Benefit Transfer (DBT).

4. MSP vs. Bhavantar: A Quick Comparison

Feature	Old System (MSP Procurement)	Bhavantar Yojana (PDP)
Who buys?	Government buys the crop.	Private traders buy the crop.
Who stores?	Government must have warehouses.	No storage needed by the government.
Payment?	Full price paid by government.	Only the “gap amount” is paid.
Waste?	High risk of rotting.	No risk of government-side waste.

5. Challenges to Watch Out For

• Trader Tricks: Sometimes, traders might lower the price on purpose, knowing the government will pay the farmer the difference anyway.
• Digital Gap: Farmers need to register on a portal. Those who aren’t tech-savvy might find it hard to sign up.

UPSC Value Box

Why this matters for the Nation:

• Self-Reliance (Atmanirbharta): India imports a lot of cooking oil. Supporting mustard and soybean farmers helps us produce our own oil and save foreign currency.
• NITI Aayog’s View: NITI Aayog suggests this “Price Gap” model for non-essential crops because it is cheaper for the government than building huge godowns.

Analytical Insight: While the government still needs to buy wheat and rice for the Public Distribution System (PDS) to feed the poor, for crops like mustard, the Bhavantar model is a smarter and more modern way to support farmer income.

Summary

The Bhavantar Yojana is like a price insurance for farmers. By expanding it to mustard, Madhya Pradesh is protecting farmers from market losses without the logistical headache of storing the crops. It’s a win-win for the government’s budget and the farmer’s pocket.

One Line Wrap: Bhavantar ensures that even if the market price falls, the farmer’s income stays protected.

Q. “Price Deficiency Payment (PDP) models like Bhavantar Bhugtan Yojana provide a fiscally smart alternative to traditional procurement.” Discuss. (10 Marks, 150 Words)

Model Hints

• Introduction: Briefly define Bhavantar as a scheme where the government pays the difference between MSP and the market price.
• Body: * Advantages: No storage cost, reduced wastage, and direct help to farmers through DBT.
  • Strategic Help: Helps in achieving self-reliance in oilseeds (Mustard/Soybean).
  • Challenges: Mention risk of trader collusion and the digital registration hurdle for small farmers.
• Conclusion: Conclude that this model is ideal for non-cereal crops to ensure farmers’ income security.