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Why Punjab finally relented on direct payment for farmers at 2-hour meet with Piyush Goyal

Rabi marketing season kicks off in Punjab Saturday but, until Thursday, the state and central governments had been locked in a tussle over the mode of payment to farmers.

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Chandigarh/New Delhi: A “threat”, some fireworks, and a concession — it was after a super-charged two-hour meeting between its ministers and Union Consumer Affairs, Food and Public Distribution Minister Piyush Goyal Thursday that Punjab finally agreed to introduce direct benefit transfer (DBT) for foodgrain procurement this season.  

The Rabi marketing season kicks off in Punjab Saturday but, until Thursday, both sides had been locked in a tussle over the mode of payment to farmers. While Punjab wanted to continue with the current system of routing the payments through arhatiyas or commission agents, the central government was batting for a shift to online, direct transfers to farmers, a change it has also effected in other states where foodgrains are procured from.

On its part, Punjab sought to explain the role the arhatiyas play in the local agricultural framework, including providing loans to farmers. The Punjab delegation that met Goyal, led by state Finance Minister Manpreet Singh Badal, said arhatiyas were an integral part of the local agricultural economy, and it was a tradition to pay farmers through them.

But the central government, which sees DBT as a way to boost transparency and prevent the exploitation of farmers by middlemen, didn’t buy the argument.

“Goyal was not impressed with this logic at all and, on more than one occasion, he told us that the Government of India would in that case not pick up any grain from Punjab,” Badal told ThePrint Friday.

“In fact, he suggested that if Punjab wanted to have its own system of payment then Punjab should do its own procurement and follow its own rules. He also rejected our request to give us more time to implement the changes,” he added.

Left with no room to argue, the Punjab delegation finally relented. “We cannot risk the Centre pulling out of procurement,” said a Punjab government officer privy to what happened in the meeting.  

“Our minister tried his best to convince Mr Goyal and his team. But he was not ready to listen to anything,” the officer added. “In fact, he seemed extremely upset with Punjab Food Minister Bharat Bhushan Ashu (also part of the Punjab delegation). He started reading out from news reports what Ashu had said against Goyal.”

Badal added that he urged the central government to treat the state fairly. “They were holding all the cards. We had very little room for manouevre. I told Goyal the story of King Porus meeting the mighty Alexander after Porus was defeated. Alexander asked him how he wanted to be treated. He said like a king treats another. I told Goyal that we want to be treated as kings,” he said.

ThePrint reached the Secretary for the Department of Food and Public Distribution, Sudhanshu Pandey, by email and phone with queries seeking details of the meeting, but there was no response by the time of publishing this report.

S. Jagannathan, Joint Secretary for the Department of Food & Public Distribution, said “Punjab was bound to implement the online payment system … as funds released by the government towards beneficiary schemes are strictly meant to be tracked under the Central Plan Scheme Monitoring System in compliance with public financial management system (PFMS)”.

Punjab Chief Minister Captain Amarinder Singh will meet arhatiyas Friday to discuss the way forward under the new system.

Although Punjab couldn’t get its way with DBT at the meeting, it did secure a six-month leg room for another contentious new rule that requires tillers to present proof that they have authority to cultivate a certain plot, in order to claim payment. This requirement is seen as a potential source of upheaval since many Punjab farmers are believed to lease land on the basis of verbal arrangements. 

Badal said Goyal had agreed to postpone implementation of this condition for six months.

Also Read: Delhi, Modi govt spar as Kejriwal minister says ‘no MSP wheat procurement centre’ set up

‘Will implement DBT despite short notice’

The Union food ministry procures wheat from Punjab through the Food Corporation of India (FCI).

Almost 130 lakh metric tonnes of wheat is expected to arrive in Punjab’s mandis in the next two months, most of which will be purchased by the Government of India at the MSP of Rs 1,975 per quintal. The Reserve Bank of India (RBI) has already cleared Rs 21,650 crore worth of credit cash limit for the procurement. 

The central government had been trying to push Punjab to adopt DBT for a few years, but the row intensified over the past two months as Haryana, which had also opposed the change earlier, relented.

While the central government claimed that all states and union territories where procurement is done are being paid directly, Punjab accused the central government of wanting to punish the arhatiyas for supporting the farmers protesting against its controversial farm laws. 

Asked about the implementation of DBT, sources in the Punjab Department of Food and Civil Supplies said almost 12.5 lakh farmers who are cultivating wheat and paddy in the state are registered with the government through the ‘Anaaj Kharid’ portal. The department, they added, will thus be able to implement DBT despite the short notice.

“We already had farmers registered and their bank accounts integrated with the portal. We were in any case paying the farmers the MSP through arhatiyas into their accounts. Now all we have to do is pay them directly,” said a senior officer of the department.

Meanwhile, Punjab Chief Minister Captain Amarinder Singh has called a meeting with the representatives of arhatiyas Friday to work out a mechanism to protect their interests in light of the shift.

On 1 April, the chief minister had met arhatiyas and claimed that he would stand with them and the “mutually interdependent relationship between farmers and the arhatiyas will continue as it is”.

The fact that the Punjab government has now agreed to introduce DBT is not likely to go down well with the arhatiyas

“Let us see what the Punjab government proposes now,” said Vijay Kalra, president of the Punjab Arhatiyas Association. “We will announce our next plan of action accordingly.”

Also Read: Why 3 new FCI foodgrain procurement orders have triggered anger in Punjab

‘An important meeting’

Badal said the meeting with the Union food ministry Thursday was very important for Punjab in other respects too. 

“Apart from the issues of DBT and land records integration, we discussed at length their withholding almost Rs 800 crore of our rural development tax. Goyal wanted us to use it solely for the upkeep or maintenance of mandis while we insisted that it can be used for improvement of roads leading to mandis, rural hospitals etc…” he added.

The Punjab delegation, he said, also raised pending dues to the tune of Rs 1,600 crore, dating back to 2007 for various factors relating to procurement, which Goyal agreed to clear.

“We also requested him to evacuate the procured grain that was lying in storage places across Punjab since 2019. We suggested to him that before the grain begins to rot, it would be better if it is distributed among the poor through some special scheme of the government of India,” said Badal.

(Edited by Sunanda Ranjan)

Also Read: How a surprise revolution in Chhattisgarh made it No. 2 for paddy procurement in India


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  1. Very great day for the genuine farmers of Punjab. Setting land records right should be the next step . Many have taken others land by force. No one is s kinb in this country…..all I dians are equal.

  2. I don’t understand the issue with DBT. If relationship between formers and arhatiyas are so interdependent, let formers pay to arhatiyas, if there is any loan, or full amount if they want to.

    This is the exact reason SAD decide to get out of Modi Government, as they are the one who get 1000s of crores of commission every year.

  3. All who ha e commented above should first go to Punjab and ascertain from farmers how they would like to be paid for their produce. 99.9% would prefer through Arhtiyas. Arhtiyas are the ATM of farmers. Their interdependence is inseparable.

    • Please keep your opinion about criminal parasites Arhtiyas with you. They live on farmers’ blood and sweat and they should be arrested for mannipulatong and exploiting farmers.

  4. When will land ownership be linked to direct online payment for procured grains

    With that move SuSu will have no source of income

    Conversion of black money to legal tax free agricultural income by “URBAN FARMERS” eliminated

    Punjab’s true grain production will be obvious

    Politicians conduit for collecting and white washing bribes will be eliminated

  5. I think this is the revolutionary step taken by the center government, paying farmers through DBT means ghost beneficiary will be identified and poor farmers will get money for their handwork done in the fields. Government of India should implement this DBT to farmers right from current season so that the people of India come to know about this fack farmers agitation reality.

  6. “..I told Goyal that we want to be treated as kings,”.

    Badal should have known that he is not in a Punjabi music video. Punjabis are no more “kings” than other Indians. Everybody should know their place in the larger scheme of things.

    If Punjabis want, they can keep all their low quality grains with them and use them for their langars. Rest of India would buy from somewhere else.

  7. Finally, the farmer’s movement leadership expose their ugly underbelly — it is all about the money. Obviously govt was right in holding firm.

  8. Finally the Central Govt has put Punjab and these goons in its place. Amarinder thought he was too clever by half when he dumped a local Punjab squabble at the doors of Delhi and washed his hands off it. The absurd arguments and claims of Federalism under threat also reeked of opportunism and outright duplicity when Punjab Govt has been a vampire on the back of FCI for decades..
    Finally Goyal put Punjab in its place with cold hard facts.

  9. Punjab’s govt is of the arhatiyas, by the arhatiyas and for the arhatiyas.
    They are least interested in the welfare of farmers.

  10. ” I told Goyal that we want to be treated as kings.” Who do you think you are, the descendant of the Maharaj Of Patiala ?? A democratically elected minister of a state who wants his own rules and systems but wants the central government to pay for it has no cards to play.

  11. Paying farmers through Arhatiyas is a tradition logic got me cracking.

    On a serious note this speaks volumes of vested interest supported by Punjab government batting for arhatiyas.

    So much for “stand with farmers” nonsense.

  12. A job well done by the Central Govt. Afterall, country needs to use modern technology, cahnge old stereotype acts & procedures, bring efficiency to the system – that is the name of progress. Otherwise, what is the use of merely changing ruling party in elections.? All media should have supported the Govt. on Farm Laws, but the 4th State miserably failed.

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