Why in news?
NITI Aayog made some key suggestions for the farm economy, in its recently released “Strategy for New India@75”.
What are the key proposals?
- The NITI Aayog's propositions include -
- conversion of the Commission for Agricultural Costs and Prices (CACP) into an agricultural tribunal
- replacement of minimum support prices (MSPs) with minimum reserve prices (MRPs) for auctioning the farm produce
- setting up government collection centres and warehouses at the village or block level
What are the concerns?
- CACP - CACP is currently mandated to recommend the minimum support prices (MSPs).
- What purpose would turning CACP into a tribunal in line with provisions of Article 323(B) of the Constitution will serve remains unclear.
- Tribunals are meant basically to adjudicate the disputes and not for going into issues like crop prices.
- As, these issues should, typically, be dictated by the dynamics of demand and supply in the domestic and international markets.
- MSP - At present, MSPs are worked out by the CACP keeping the farmers’ interests, among other factors, in view.
- NITI Aayog is right in acknowledging that the MSPs can only be a partial solution to boost the farmers’ income.
- However, their replacement with MRPs to serve as the starting point for auctions at mandis might prove even worse.
- There is inefficiency of agricultural markets, diversity of trading systems and hold of the middlemen over farm commodities’ commerce.
- Given these, the reserve price-based auction system may not suit the farmers.
- Traders operating in the regular mandis would simply refuse to quote higher bids, to force the farmers to sell their produce to them outside the market premises at throwaway prices.
- Storage - The plea for crop collection and storage facilities at the village level sounds a little utopian.
- Despite efforts and investments over the past, crop procurement and storage infrastructure has failed to expand beyond a few wheat and rice growing regions.
- In all, these may not likely serve to mitigate farmers’ distress by doubling their income.
What are the other feasible proposals?
- NITI Aayog has suggested ending power and water subsidies and, instead, offering fiscal sops for micro-irrigation (like drip irrigation).
- It has also emphasised on bringing in coherent and stable agricultural export policies, ideally with a time horizon of 5 to 10 years.
- Such a policy regime is imperative to create a reliable export window as an outlet for the surplus farm produce.
- [However, the recently announced national policy for agri-exports does not conform to this principle.
- It has ample room for restricting exports at any time to manage the domestic prices of mass-consumed farm items.]
- Besides these, the NITI Aayog has called for
- diluting the Essential Commodities Act
- promoting contract farming
- encouraging futures trading for better price discovery
- facilitating sale of farm produce at relatively higher prices in the off-seasons
- The recommendation to confer full-fledged infrastructure status on the post-harvest value chain to enable them to access the available fiscal incentives is also welcome.
- It is now essential that these workable suggestions are implemented.
Source: Business Standard
