Price Deficiency Payment Scheme (PDPS)

Introduction 

The Price Deficiency Payment Scheme (PDPS) is an agriculture scheme launched by the Government of India under the integrated Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) in recent years, with significant implementation and enhancements around 2024-25. PDPS addresses the problem of fluctuating market prices that often fall below the Minimum Support Price (MSP) set by the government for certain crops like oilseeds and pulses. Under this scheme, farmers receive direct payments compensating the difference between the MSP and the actual selling price in the market, up to a certain limit. This direct benefit transfer helps ensure that farmers get fair and remunerative prices for their produce without the government needing to physically procure and store crops.

The scheme mainly targets farmers, especially small and marginal producers, who are vulnerable to market price volatility. It promotes financial security by reducing distress sales and dependence on middlemen. States have the option to implement PDPS or the Price Support Scheme (PSS) based on local conditions. The benefits include improved farmer income, less post-harvest loss, payment transparency, and smoother market functioning. Registration and selling produce through notified markets or auctions are key eligibility and application steps. PDPS is a forward-looking policy aiming to strengthen India’s agricultural market framework and safeguard farmers’ livelihoods in a simpler, efficient manner relevant to today’s agricultural economy in India.

Overview of the Scheme

The Price Deficiency Payment Scheme (PDPS) was launched by the Government of India under the Ministry of Agriculture and Farmers Welfare. It is a key component of the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA), introduced to protect farmers from losses due to prices falling below the Minimum Support Price (MSP). The scheme was first implemented in 2018-19 during the Kharif season and continues as part of ongoing government support for farmers.

The scheme is implemented mainly by the Department of Agriculture at central and state levels. States have the option to adopt PDPS or the Price Support Scheme (PSS) for notified pulses, oilseeds, and copra. Under PDPS, pre-registered farmers sell their produce in notified markets, and the government pays the difference between the MSP and the market price directly to the farmers’ bank accounts through Direct Benefit Transfer (DBT).

In terms of funding, the scheme follows a central-state share pattern, typically with the Central Government bearing 60% of the cost and the State Government covering the remaining 40%. The government has enhanced the support to cover up to 40% of state production for certain crops, thus expanding the reach and benefit.

Coverage under PDPS includes oilseeds, pulses, and copra. The scheme currently excludes crops like rice and wheat, which continue to be procured through traditional MSP methods. The scheme’s components focus on providing price compensation without physical procurement, thereby reducing storage and logistics costs for the government.

Example: If the MSP for a pulse is ₹5,000 per quintal but the market price is ₹4,000, the government pays the ₹1,000 difference directly to the farmer’s account for the quantity sold in notified markets.

Objectives 

The Price Deficiency Payment Scheme (PDPS) objectives are designed to support farmers and improve agricultural market stability. The primary goal is to provide compensation to farmers when market prices for their crops fall below the Minimum Support Price (MSP) fixed by the government. This helps ensure farmers get a fair price for their produce without the government physically procuring the crops.

The scheme aims to reduce government expenditure and logistical burdens related to crop procurement, storage, and transportation. By paying the price difference directly to farmers, it promotes transparency, reduces dependence on middlemen, and encourages farmers to sell in notified markets or auctions.

PDPS also aims to increase farmers’ income and safeguard their livelihoods from market uncertainties. It supports crop diversification by covering pulses, oilseeds, and copra – crops not fully covered by traditional MSP procurement like rice and wheat. This encourages a more balanced agricultural pattern responsive to demand.

The key objectives of the Price Deficiency Payment Scheme (PDPS) are:

• Provide farmers with compensation for the gap between market price and MSP.
• Reduce the physical procurement burden on government agencies.
• Ensure fair and remunerative prices for farmers’ produce.
• Promote transparency through direct benefit transfers.
• Support agricultural diversification beyond rice and wheat.
• Minimize farmers’ dependence on middlemen and reduce distress sales.
• Stabilize agricultural income and promote market-oriented reforms.

These objectives reflect the scheme’s purpose as a farmer-friendly and efficient agriculture scheme offering financial security and market support.

Key Features / Benefits 

The Price Deficiency Payment Scheme (PDPS) offers several important benefits and features that help farmers manage price fluctuations and ensure fair income. Each feature is designed to provide financial support efficiently, promoting transparency and reducing government costs.

• Direct Compensation for Price Deficit

Farmers receive direct payments for the difference between the government’s Minimum Support Price (MSP) and the actual market price. (Example: If the MSP for soyabean is ₹5,000/quintal but the market price is ₹4,000, the farmer gets ₹1,000 per quintal as compensation.)

• Transparency Through Direct Benefit Transfer (DBT)

Payments are transferred directly into farmers’ Aadhaar-linked bank accounts, cutting out middlemen and ensuring quick, transparent assistance.

• Reduced Government Procurement Burden

By paying the difference instead of physically buying crops, the scheme saves government costs related to storage, transport, and disposal of produce.

• Coverage of Pulses, Oilseeds, and Copra

The scheme primarily supports these crops, which traditionally receive less physical procurement compared to rice and wheat, encouraging crop diversification.

• Enhanced Support Limit and Duration

The government increased the compensation limit from 25% to 40% of state production to benefit more farmers per season, and extended the scheme’s implementation period from 90 to 120 days.

• Encourages Fair Market Practices

By ensuring farmers receive a fair price, PDPS discourages distress sales and reliance on middlemen during market slumps.

• Supports Small and Marginal Farmers

The scheme targets vulnerable farmers, helping stabilize their incomes amid price uncertainties in the agricultural market.

• Integration with State Agencies

States register farmers and monitor sales, enabling localized management and quicker benefits distribution.

• Helps Control Food Subsidy Expenses

By reducing physical procurement and related costs, the scheme helps the government maintain food subsidy budgets effectively.

• Promotes Agricultural Market Reforms

PDPS complements reforms in agricultural marketing by supporting price stability without heavy procurement interference.

These benefits reflect how the Price Deficiency Payment Scheme (PDPS) provides practical financial support and market stability, ensuring better livelihoods for farmers across India.

Eligibility Criteria 

Eligibility for Price Deficiency Payment Scheme (PDPS) is clearly defined by official sources to ensure direct support reaches the appropriate beneficiaries. The criteria vary by type of beneficiary and are designed to make the application process transparent while ensuring financial assistance to the honest participants in the agricultural market.

Farmers Eligibility:

• Must be registered with notified Agricultural Produce Market Committees (APMC) or similar state government systems.
• Should have cultivated the eligible crops (mainly pulses, oilseeds, copra) in the notified season and region.
• Need to provide proof of landholding or cultivation (e.g., land records) and Aadhaar-linked bank account for Direct Benefit Transfer (DBT).
• Resident Indian farmers with valid identification documents are eligible.
• Pre-registration before harvest or sale is typically required to avail benefits.
• Not eligible: Farmers selling outside notified markets or selling crops excluded from the scheme (e.g., rice, wheat).

Self-Help Groups (SHGs) & Farmer Producer Organizations (FPOs):

• Must be registered and active under government welfare or cooperative schemes.
• Should have proper bank linkage and transactional history.
• FPOs require Producer Company registration with a minimum member base and proof of active operations supporting farmers’ crops and sales.

Entrepreneurs, Startups, MSMEs:

• Eligibility depends on state-specific directives and requires valid registration such as UDYAM or GST certificates.
• Must be engaged in approved agricultural service activities related to marketing or procurement under PDPS.

Special Categories:

• Some states may provide additional ease or coverage for women farmers, Scheduled Castes/Scheduled Tribes (SC/ST), and Northeast/Hilly region farmers as per specific local policies (check state-level schemes).

Mandatory Documents:

• Aadhaar Card (for identification and DBT linkage)
• Land ownership or lease documents
• Bank passbook or cancelled cheque linked to Aadhaar
• Registration certificates (for SHGs/FPOs/entrepreneurs)
• Crop cultivation proof, sale receipts from notified markets

These eligibility criteria under the Price Deficiency Payment Scheme (PDPS) ensure only genuine beneficiaries receive timely compensation for price differences, promoting fairness and inclusivity in India’s agriculture sector.

Application Process

The Price Deficiency Payment Scheme (PDPS) application process is designed to be transparent, simple, and accessible for farmers across India. Here is a step-by-step overview based on official guidelines:

• Where to Apply:

Farmers and beneficiaries can apply online through the respective State Agriculture Department or APMC Mandi portal where the scheme is implemented. Some states may use local mandi registration portals, while central updates and support are coordinated through the Department of Agriculture & Farmers Welfare. (No single nationwide portal is mandated; registration is state/market specific.)

• Registration/Login:

Applicants must first register on the official state or mandi portal by creating a user ID using their Aadhaar number and basic personal details. If already registered with the APMC mandi for crop sale, they may log in using those credentials.

• Application Form Filling:

The application form requires filling in:

• Beneficiary details (name, Aadhaar number, contact)
• Land/farm details (location, size, crop sown)
• Component selection (crop type covered by PDPS)
• Bank details linked with Aadhaar for Direct Benefit Transfer (DBT)

1. Documents to Upload/Submit:

Beneficiaries must upload or submit (offline or online):

• Aadhaar card copy
• Land ownership or lease proof
• Bank passbook or cancelled cheque linked with Aadhaar
• Crop cultivation proof or sowing certificate
• Sale/supply receipt from notified market/auction
• Registration certificate (if part of FPO/SHG)

• Application Fee:

No application fee is required to apply under the PDPS scheme.

• Acknowledgment/Application ID:

After submission, applicants receive an acknowledgment with a unique application ID for tracking.

• Verification and Field Inspection:

Verification of documents and beneficiary identity is done by district/state agricultural officers. A field inspection may be conducted to confirm crop sowing and presence.

• Approval and Assistance Release:

Once verified, the price difference amount is approved and directly transferred via DBT to the farmer’s Aadhaar-linked bank account, usually within 15-30 days post verification.

• Offline Application Route:

Farmers can visit nearest Agricultural Extension Centers, Krishi Vigyan Kendra (KVK), ATMA offices, or Block Agriculture Offices to apply and get assistance with documentation and form filling.

• Official Help and Support:

For help, farmers can contact local State Agriculture Departments or mandi offices. State government portals usually provide helpline numbers and email support specific to PDPS.

Tips for a Smooth Application:

• Ensure name and Aadhaar details exactly match official documents.
• Upload clear, correct copies of all mandatory documents.
• Register and apply within the notified period (usually near harvest season).
• Keep a record of application ID and follow up with local agricultural officers if payments delay.

This stepwise process helps eligible farmers access the benefits of the Price Deficiency Payment Scheme (PDPS), ensuring timely compensation and minimizing hassle in the claims procedure.

Challenges or Limitations 

While the Price Deficiency Payment Scheme (PDPS) offers valuable support to farmers, it also faces certain challenges and limitations. Understanding these common issues helps improve implementation and guides beneficiaries to avoid pitfalls.

• Challenge: Delays in Price Verification and Payment

Price monitoring and verification can take time due to data collection from multiple markets. This sometimes delays payment transfers to farmers.

What to do: Maintain accurate sales records and ensure timely submission of documents to speed up verification.

• Challenge: Limited Budget and Coverage Caps

The scheme compensates only up to a capped production quantity (typically 40% of state production), which may exclude some farmers or produce volumes. Budget constraints also limit expansion to more crops.

What to do: Farmers should focus on timely registration and market sale within coverage limits and stay informed about scheme updates.

• Challenge: Document and Identity Mismatches

Incorrect or incomplete documents (like Aadhaar mismatch, land record discrepancies) cause disqualification or slow processing.

What to do: Keep all identification and land records updated and consistent before applying.

• Challenge: Seasonal Application Windows

Applications and sales must be within notified timeframes tied to crop seasons, limiting flexibility for farmers.

What to do: Apply early and plan crop sales according to official notification schedules.

• Challenge: Banking and Digital Access Issues

Remote or rural farmers may struggle with Aadhaar-linked bank accounts or online portal access needed for direct benefit transfers.

What to do: Use local agricultural offices or Krishi Vigyan Kendras for assistance in digital registration and document uploads.

• Challenge: Awareness and Outreach Gaps

Many farmers are unaware of the scheme or misunderstand eligibility and procedures, leading to low participation.

What to do: Attend state agricultural department awareness drives, use helpline support, and consult local extension offices.

• Challenge: Limited Crop Types Covered

PDPS mostly covers pulses, oilseeds, and copra; major staples like rice and wheat are excluded, limiting benefits for those crop farmers.

What to do: Farmers can explore other government schemes specifically for excluded crops to supplement income.

• Challenge: Risk of Market Distortions

If many farmers shift solely to PDPS-covered crops, it might cause oversupply and price volatility in local markets.

What to do: Diversify crops thoughtfully, considering market demand and improved agricultural advice.

These balanced points reflect recognized challenges and practical solutions to improve the effectiveness and reach of the Price Deficiency Payment Scheme (PDPS), helping it serve as a reliable safety net for India’s farmers.

Government Support & Future Outlook 

The Price Deficiency Payment Scheme (PDPS) works in connection with other key agricultural missions to offer a broader safety net and support to farmers. It is a component of the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA), which also includes the Price Support Scheme (PSS) and the Market Intervention Scheme (MIS). These schemes collectively aim to stabilize farmers’ incomes, especially for pulses, oilseeds, and copra.

PDPS links well with schemes like PM-KISAN, which provides direct income support, and PMFBY (Pradhan Mantri Fasal Bima Yojana), which offers crop insurance, creating a network of financial support for farmers. This convergence ensures that farmers benefit from both price stability and crop loss coverage, improving their financial security.

For example, a Farmer Producer Organization (FPO) growing oilseeds can receive guaranteed price compensation through PDPS while also availing crop insurance under PMFBY. Additionally, schemes like ATMA and NFSM promote better agricultural practices and diversification, enhancing overall farm income and reducing dependency on limited crops.

The government continues to update PDPS under PM-AASHA, with enhanced budget allocations and extended timelines noted through 2025, reflecting its importance in the roadmap to double farmers’ income and stabilize agricultural markets in India.

Conclusion 

The Price Deficiency Payment Scheme (PDPS) matters because it ensures farmers receive fair prices for their crops even when market rates fall below the government-set Minimum Support Price (MSP). Small and marginal farmers, who are most vulnerable to price fluctuations, gain the most from this scheme’s direct compensation. To benefit, farmers should check their eligibility and prepare necessary documents like Aadhaar and land records by registering on their state’s official agriculture portal or contacting their local agriculture office. Staying informed about application timelines and required proofs can help avoid delays. It is important to verify the latest details and updates on the official state or central government portals or helplines since rules and benefits may change periodically.

Explore detailed resources on this scheme and the full suite of programmes at ALL ABOUT AGRICULTURE. For one-on-one assistance, call us at +91 8484002620.