What is the issue?
- India is witnessing continued farmer agitations in different states and the country's capital.
- It is vital at this juncture to assess the structural and policy concerns that plague India's agricultural sector.
What are the policy shortfalls and possible solutions?
- PMFBY - The Pradhan Mantri Fasal Bima Yojna (PMFBY) was designed to provide crop insurance.
- The Central government shares part of the premium subject to certain conditions.
- The states have to wait for the Central government’s share, irrespective of the cropping density in the region and irrespective of whether the region is rain-fed or irrigated.
- Allowing states to design their own crop insurance schemes and yet providing the Central government share of the premium would yield better results.
- E-NAM - An incentive of Rs 75 lakh per mandi is given by the Centre to the states for linking each market with E-NAM.
- However, some states log in all FCI purchases as E-NAM transactions and so, much of the recorded turnover is made up and not real.
- Incentivising each state to have the electronic platform which meets the basic criteria of interoperability with other states would be better.
- Trade negotiations - As per the Constitutional provisions, trade negotiations are under the purview of the Centre.
- However, the anomaly is that agriculture is in the domain of the states.
- The Central government should try bringing the states into the decision making forum if international trade treaties involve agricultural aspects.
- Trade policies - Every time food prices rise, the Centre intervenes to rein in inflation.
- It responds by facilitating the unhindered import of agricultural commodities.
- However, increased imports work against the profitability of the farmers.
- The Centre should instead set a floor price for all such farm produce to reduce the impact of price fluctuations on farmers.
- Bringing in place the “Price Deficiency Payment” mechanism, whereby the central government makes for the shortfall between the market price and floor price can help.
- Credits - Scrutiny of the farm loan data, after a series of farm loan waivers, revealed that public and private sector banks have indiscriminately given loans to less credible farmers.
- Evidently, loans were provided based on their asset value rather than economic viability.
- The loans were arbitrarily given by the banks to also meet their own priority-sector lending target.
- In all, the “one-size-fits-all” policy is becoming irrelevant for the farm sector and necessitates a more decentralised system for decision making, implementation and performance appraisal.
Source: Indian Express
