Centre Directs Kerala to Stop Paying Additional Bonus to Paddy Farmers; Cites Alleged Excess Stock Concerns

Thiruvananthapuram: The Central government has directed the Kerala government to discontinue the additional bonus being paid to paddy farmers, citing concerns over excess grain stock and the resulting financial burden on the public exchequer. The directive was issued by the Secretary of the Department of Expenditure under the Union Finance Ministry to the State Chief Secretary.

In the letter, the Centre argued that the additional bonus paid by Kerala over and above the Minimum Support Price (MSP) fixed by the Union government has encouraged increased paddy cultivation, leading to surplus production and storage beyond national requirements. The Centre noted that large-scale procurement of wheat and paddy in recent years has resulted in excessive stockpiling, which is increasing year after year and placing a heavy strain on government finances.

The Centre also highlighted environmental concerns, stating that wheat and paddy are water- and fertiliser-intensive crops. Their excessive cultivation, the letter said, contributes to groundwater depletion, soil erosion, biodiversity loss, and stubble burning. This trend, it warned, poses serious risks to sustainability, climate resilience, and public health. The Union government has asked Kerala to review its existing bonus policy and consider extending incentives to other grains instead of paddy.

Meanwhile, the Kerala government has maintained that the additional bonus is aimed at easing paddy procurement and supporting farmers. A recent Cabinet meeting decided to fix the procurement price at 30 rupees per kilogram for all farmers supplying paddy from October 20. The price was revised from 28.20 rupees to 30 rupees with effect from November 1, and the rate was unified after two different prices were in place during the same season.

During the season, 91,280 metric tonnes of paddy were procured from 36,311 farmers. Of the total procurement amount of 274.9 crore rupees, 160 crore rupees has already been disbursed. The remaining amount is being released through banks as Price Support Scheme (PRS) loans.

The State government has pointed out that payments due from the Central government remain pending. Around 500 crore rupees is expected for the years 2024 and 2025, while arrears since 2017 have reached 1,344 crore rupees.

As part of efforts to streamline procurement, the State has decided to procure paddy in Palakkad district during the second crop season on a pilot basis through cooperative societies. Procurement in other districts will be carried out in collaboration with private mill owners.