05/11/2019 - Government Policies | Mainstorming

IAS Parliament 5 years

KEY POINTS

· CACP, in its latest report for rabi season, has batted for direct procurement by private players, as envisaged under the Private Procurement Stockist Scheme.

· While the purpose of open-ended procurement was to provide support to farmers, given the MSP hikes, this seriously weighed down the government’s finances.

· As long as the government continues with MSP as its primary tool for farm support, kindling private players’ interest in procurement of grains will prove difficult since no private trader will be willing to procure grains at a price higher than the market price, which is usually the case with MSP.

· Apart from quality issues with grains, the MSP regime also hinders liquidation of stocks through export since it will trigger violations of WTO norms.

· Given how MSP benefits only a small pool of farmers from a handful of states while distorting agricultural production in favour of a few crops, the government will be meaningfully supporting farmers if it were to give per-acre support.

· Along with the quasi-universal basic income scheme, PM Kisan, and the insurance scheme, PM Fasal Bima Yojana, a per-acre support will mean the farmer will be able to make choices based on market requirement, rather than producing to benefit from an open-ended grain procurement policy.

· While MSP guarantees that farmers grow only certain kinds of crops, and subsidies on fertiliser and electricity mean indiscriminate use of these resources, a fixed per-acre support scheme will help cut down wastage.

· More important, it shall also address demand-side constraints. FCI can still maintain its buffer stock, but the PDS can be disbanded, as a NITI Aayog study shows that people tend to graduate to a higher quality of grains once they are allowed freedom and flexibility to choose.