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Decentralized Procurement Scheme

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Decentralized Procurement Scheme

The decentralized procurement (DCP) scheme was operationalized by the government in 1997 (together with the Centre and some of the states also procure foodgrains from the farmers, locally). Under this scheme, the designated states procure, store and also issue foodgrains under the TPDS. The difference between the economic cost of the states and the central issue price (CIP) is passed on to the states by the Government of India as the subsidy. The decentralized system of procurement helps to cover more farmers under the MSP operations, improves the efficiency of the PDS, provides varieties of foodgrains more suited to local taste, and reduces the transportation costs of the FCI.

The Government of India urged all states to adopt the DCP scheme so that costs of distribution can be saved and outreach of price support mechanism to the farmers in hitherto weaker areas can be improved. To overcome the problem of gaps in the flow of information about procurement operations on a day-to-day basis, an Online Procurement Monitoring System (OPMS) has been evolved for reporting and monitoring on a daily basis, procurement operations for wheat, paddy and coarse grains in the country.

Two decisions of the Government of India that will impact procurement and stocks of rice and wheat from are:

(i) To limit procurement from states that are declaring bonus over and above the MSP to the extent of targeted TPDS and other welfare schemes (OWS) requirements. In the case of non-DCP states declaring bonus, the FCI will not take part in MSP operations in those states.
(ii) To cap the percentage of levy on rice at 25 percent.

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