Government procurement to boost rural economy with Rs 50,000 crore to 2 million farmers

The government’s rice procurement drive will give 2 million farmers a total of over Rs 50,000 crore before Diwali, which officials said would give another boost to the rural economy which has gained from a series of record harvests.
“As per our internal estimate, we will be able to procure 16.7 million tonnes of rice by Diwali out of the total target of 49.75 million tonnes. The purchase will be mostly from Punjab and Haryana, where procurement is likely to be over by then. We expect to procure a total of 15.7 million tonnes rice from Punjab and Haryana during this period,” said an official of Food Corporation of India, the apex agency which procures grains for the country.

The official said the government had so far procured 10.1 million tonnes of rice, out of which Punjab and Haryana together accounted for 94%. The government has already disbursed more than Rs 28,500 crore benefitting 1.2 million farmers.

“The remaining grains have been procured from Uttar Pradesh, Uttarakhand and Tamil Nadu. Procurement in other major rice producing states like Andhra Pradesh, Telangana, Chhattisgarh and West Bengal will start in the last week of November,” the official said.

This year, the government is expecting a record production of rice. As per the first advance estimate, the output is likely to be 102.36 million tonnes. However, the output may see a slight drop due to damages from the recent heavy unseasonal rains which had badly hit rice producing belt comprising parts of Andhra Pradesh, Telangana and Karnataka. Agriculture department official, however maintains that the overall production will not suffer much.

“Overall production may not see much difference as output in Punjab and Haryana is more than expected. Moreover, increase of around 5% in rice acreage may compensate the fall in production due to damages,” said a senior agriculture ministry official.

Earlier this year, the government had disbursed about Rs 75,000 crore to 4.2 million wheat farmers during the lockdown period, procuring record 38.2 million tonnes of wheat.

“That had not only pumped liquidity in rural markets but also helped farmers survive the Covid-19 crisis,” the official said.

Higher rural income, helped by above-normal monsoon rainfall, has helped boost consumer demand for gold, cars, two-wheelers, consumer goods, tractors and farm inputs such as pesticides, seeds and fertilizers. Officials said the trend was likely to continue.