Centre writes to Punjab govt to implement online direct payment system, compliance of PFMS

Days after the Food Corporation of India (FCI) directed the Punjab government to provide land records of farmers so as to make direct online payment of MSP to their accounts, the Union Ministry of Consumer Affairs, Food and Public Distribution has also sent a letter to the state to implement online direct payment system and compliance of Public Financial Management System (PFMS) from the coming rabi marketing season (2021-2022).

The letter also said that these guidelines are followed by majority states except Punjab, where MSP payments are still being paid through arhtiyas.

The Centre has been issuing such directions to the state government for the past couple of years. But in Punjab, payment of farmers comes in the accounts of the arhtiyas (commission agents) who further make it to the farmers through cheques or online transfer.

In the letter addressed to the Principal Secretary (Food), Government of Punjab, Deputy Secretary GOI, mentioned that he has been directed to refer the instructions issued by the Centre, stipulating mandatory use of the Expenditure Advance Transfer (EAT) module of PFMS by June 15th 2018, failing which no further funds released to agencies (read procurement agencies).

PFMS is a web-based online software application developed and implemented by the office of the Controller General of Accounts (CGA) under which direct payment to the beneficiaries are made for government schemes. But here, linking farmers accounts with PFMS was just to pay their crop money directly into their accounts.

The letter (copy of which is available with The Indian Express) further says that the objective of PFMS/EAT Module is end-to-end tracking of the funds till the last mile beneficiary.

As per PFMS mandate, the rollout will also result in improved programme administration and management, reduction of float in the system, direct payment to beneficiaries and greater transparency and accountability in the use of public funds. In view of this, the department has regularly pursued with states to implement the directions of online payment directly into the farmers’ bank accounts and compliance of PFMS.

The letter also stated that the matter has also been discussed in recent meetings held in this department on January 19, 23, 25, 2021.

In case payment is done through a state portal, the state government is required to integrate their software with PFMS so that MSP payment to farmers could be captured on a real time basis. It is also requested that a report on preparedness for implementation of aforesaid directions may be furnished as early as possible, said the letter.

The government mainly wants to keep arhtiyas away from payments of MSP to farmers.

“Farmers’ accounts are never linked to the PFMS portal in Punjab as they never got direct payment for wheat and paddy in their accounts till date under this system. Instead of making payment to farmers under PFMS, the state government had put a condition on arhtiyas that every farmer will get payment through cheques from their respective arhtiyas but here too, unfair practices are adopted by arhtiyas, who at the time of issuing cheques to the farmers, send their munim (accountant) with farmers to the bank for its encashment and after encashment, the munim pays the farmers after making several cuts. A common farmer, who is dependent on arhtiyas, never gets full MSP from the arhtiya,” said Jagmohan Singh, general secretary, Bharti Kisan Union (BKU) Dakuanda, adding that the arhtiyas’ main business is money lending to the farmers at high rate of interest as there is hardly any proper record of this and no government control.

“Due to this, majority arhtiyas are involved in the exploitation of farmers, who keep on paying interest of over interest on principal amounts for decades.

“If farmers are dependent on them, that does not mean that they get the license of exploiting them as fair deal is needed here,” he added.

In several cases, advance cheques are taken by ‘arhtiyas’ from farmers at the time of giving money on credit under their money lending business to him (farmer) and these cheques are used at the time of crop payment.

“We are not against commission agents but the unscrupulous money lending business of them with the farmers,” said Jagmohan Singh.

Prof. Sukhpal Singh, Principal Economist (Agriculture Marketing), Punjab Agriculture University (PAU) Ludhiana, said: “Arhtiyas are also making big bucks by providing credit to the farmers at 18 to 24 per cent rate of interest and according to an estimate, around 20 per cent (Rs 18,000 to 20,000 crore) of the total debt of the farmers in Punjab is provided by the arhtiyas, who hardly provide any fair record to the farmers about their return and farmers always remained indebted to them.

“Arhtiyas who always object to direct payment will not be able to charge money from farmers according to their own wishes after PFMS system,” said another farmer leader, adding that if arhtiyas are fair in their money lending system, then most of the farmers would have been debt-free today in the state and it is very much possible if the state government sets proper norms for arhtiyas.

Punjab alone has some licensed 48,000 arhtiyas, of which 28,000-odd are active. They basically provide platforms outside their shops where the produce of farmers is unloaded, cleaned, auctioned, weighed and bagged, before being loaded and moved from the mandi premises.

For these services, they are given a 2.5 per cent commission over and above the MSP and this commission comes to around Rs 1,400 crore annually for procurement of the wheat and paddy only, and the Centre does not want to pay it.
Principal Secretary (Food) Punjab KAP Sinha said that under the PFMS system, arhtiyas will get their commission for the facilities they provide. “But more than commission, arhtiyas are interested in this unfair money lending business,’’ said Jagsir Singh, a BKU (Ugrahan) leader.