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.
