HindustanTimes Fri,19 Dec 2014

Proposed farm policy too divergent to be cleared

Gurpreet Singh Nibber , Hindustan Times  Chandigarh, April 09, 2013
First Published: 09:51 IST(9/4/2013) | Last Updated: 10:13 IST(9/4/2013)

A draft of the agriculture policy tabled last week has deviated from the Punjab government's stand on key issues.


Foreign direct investment (FDI), free electricity to farmers, and the payment of the minimum support price (MSP) of wheat and paddy to growers through commission agents are the issues on which the draft and the government's stand differ.

A 10-member committee led by the Punjab state farmers' commission (PSFC) chairman, GS Kalkat, submitted the draft. The chances that the recommendations will be accepted are bleak, for these are opposed to the official viewpoint.

The draft report recommends the rationing of free-of-cost electricity to the agriculture sector. The draft of the policy says: "For improving power and water use efficiently, power supply should be metered and charged beyond a fixed level of free supply. The subsidy so saved should be used for agricultural research and skill development for rural unemployed people."

The nearly 11.5-lakh agricultural tube-wells consume 10,000 million units of electricity worth Rs. 4,700 crore every year. Since the Punjab government started paying subsidy to farmers in mid-1990s, the state government was never comfortable to transfer its amount to Punjab state power corporation limited (PSPCL) or the erstwhile state electricity board.
Erratic payment to the power corporation is a major reason leading its bankruptcy. Before the free-electricity regime, the state electricity board used to register profit.

The committee which took a year to submit the report also recommended modern marketing of fruits and vegetables to boost diversification. It also recommended creating cold chains in the government sector and including farmers' groups, co-operatives, and large retail chains in the marketing network.

"By investment by a large retail chain, we mean foreign direct investment (FDI) or investment by an Indian chain," said a member on the draft committee. The state's coalition government has rejected the Centre's proposal for FDI in the retail business.

The draft agriculture policy also recommends against distributing the MSP of wheat and paddy to farmers through commission agents. The state government distributes Rs. 20,000 crore every year as the MSP on wheat and paddy, most of it through commission agents.

Focusing on the fiscal health of farmers, the draft writers recommend improving the outreach of institutional credit to cultivators. "Private moneylenders (commission agents) should be registered and brought under legal framework through legislative measures. The rate of interest and the system of transaction between commission agents and farmers should be regulated," said another member on the committee.

There are 15-lakh farming families in Punjab and 30,000 commission agents. The state government claims it to be difficult to deal with individual farmers and discount the role of commission agents. "Our stand is clear," said an office-bearer of the commission agents' association. "We will not object in case more institutional loan is given to farmers but it can't be ignored that 5-lakh farming families in Punjab are landless and ineligible for institutional loan."

The draft is considered the roll out of a policy for a "second Green Revolution". It focuses on shifting from paddy to maize in the kharif season, and recommends that the state government arranges Rs. 2,500 crore for thrust to "the wonder crop".


Growing pangs

11.5 lakh
agricultural tube-wells consume 10,000 million units of electricity worth Rs. 4,700 crore every year. Farm sector pays nothing

R20,000 cr
paid every year as the MSP on wheat and paddy, most of it through commission agents, whose role the government has said it can't discount
15 lakh farming families in Punjab
30,000 commission agents

R2,500 cr
Needed for thrust to "the wonder crop", maize

FDI: Investment by large foreign retail chains in the vegetable and fruit marketing network recommended, while the state's coalition government has rejected the Centre's proposal for the FDI in retail

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