Telangana likely to drop Rs 500 fine rice bonus from upcoming Rabi season

Telangana is considering scrapping the Rs 500 per quintal bonus for fine paddy following the Centre’s advice, amid rising surplus stocks, fiscal pressure, and concerns over crop imbalance ahead of the upcoming Rabi season.

Hyderabad: In a big policy shift aimed at addressing surplus rice production, the Centre has advised all major paddy-producing states to review and reconsider the special incentives being offered to encourage paddy cultivation.

Following this directive, the Telangana government is actively weighing the option of discontinuing the Rs 500 per quintal bonus currently provided to farmers growing fine rice (also referred to as fine paddy or “sanna vadlu”) starting from the upcoming Rabi (Yasangi) season.

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The Rs 500 bonus, introduced by the state government above the Minimum Support Price (MSP), was initially rolled out for fine varieties to boost cultivation of premium rice. It led to a sharp increase in fine paddy acreage — reportedly by asmuch as 61% in some seasons — and contributed to record procurement levels in the state, with fine varieties forming a substantial portion.

However, the surge in paddy output, particularly fine rice, has resulted in excess stocks, mounting storage and milling costs, and pressure on the state’s finances. Telangana has repeatedly urged the Centre to increase procurement allocations and boiled rice off-take to manage the surplus, highlighting the mismatch between booming local production and central procurement limits.

Sources indicate that the state is now evaluating the Centre’s broader advice against state-specific incentives, which are seen as distorting crop patterns and contributing to water-intensive paddy dominance at the expense of other crops.

Officials are deliberating whether continuing the bonus is sustainable amid these concerns, especially for the Rabi season.Farmers’ groups and opposition parties have previously criticised delays in bonus disbursals and demanded its extension to all paddy varieties, not just fine ones. Any decision to withdraw the incentive could spark concerns among cultivators who shifted to fine varieties expecting the additional Rs 500 support, potentially earning them an extra Rs 15,000 or more per acre in some cases.

A final call on the bonus is expected soon, with inputs from the Civil Supplies Department and after consultations with stakeholders.This development comes as several paddy-growing states grapple with similar issues of overproduction and groundwater depletion.