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Farm relief, new MSP regime on govt’s to-do list

The Narendra Modi government’s new agenda for the crisis-ridden farm sector is being geared towards achieving the single goal of doubling agricultural incomes — a legacy of its first term in office.

india Updated: May 31, 2019 09:15 IST
Hindustan Times, New Delhi
MSP,india news,farm relief
A farmer sitting beside dead Lime trees due to drought at Navegaon Village, Paithan in Marathwada, India, on Monday, April 25, 2016. (Hindustan Times file photo)

The Narendra Modi government’s new agenda for the crisis-ridden farm sector is being geared towards achieving the single goal of doubling agricultural incomes — a legacy of its first term in office.

Prime Minister Modi had ambitiously promised a 100% jump in farmers’ incomes between 2017 and 2022, but farmers have been hobbled by unprofitable sales and even negative returns on some crops, as farm produce continue to sell below federally fixed rates known as minimum support prices (MSPs).

A three-pronged agenda is likely to be taken up, one that will aim to overhaul the MSP regime and warehousing and agricultural markets as well as widening of income support to farmers, an official said on condition of anonymity.

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Niti Aayog, the state-run policy think-tank, is working on a set of recommendations with interministerial inputs for the Prime Ministers’ Office, the official said. The recommendations will propose “reforms in appropriate areas”, the official said.

Niti Aayog has reviewed the MSP regime, going into reasons why the PM-AASHA scheme of the previous government wasn’t effective in ensuring MSPs for all 23 crops. It has prepared a new set of mechanisms to ensure farmers get MSP rates in the non-cereal segment, the official said, without specifying the crops.

MSPs are meant to act as floor rates, thereby helping avoid distress sales. According to data from rating and research company CRISIL Ltd, during 2017-18, of the 14 major crops which account for 80% of the total area sown in the country, eight crops , including pulses and oilseeds, traded below MSPs.

To double farm income, the government will count on a likely shift towards an income-transfer approach, the official said. The income support scheme, PM-KISAN, is likely to be expanded to cover all farmers, for which initial estimates are being calculated.

“This is a manifesto promise, so we have to be ready with the basic framework,” the official said.

Under PM-KISAN, small and marginal farmers with less than two hectares of land are to receive ₹6,000 a year in three equal instalments. It is intended to benefit 120 million farmers.

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On the production side, the government will likely unveil a mission to ramp up production of oilseeds, similar to the mission on pulses undertaken in the previous term.

On the infrastructure side, the official cited above said proposals are being devised to expand the country’s agri-warehousing infrastructure to boost farm incomes. For this, a national warehousing network along national highways is being considered that will be interlinked with agricultural markets.

MSPs work only when there is sufficient procurement (or buying of farm produce) by government agencies so that it can mop up most of the surplus brought to the markets. Under PM-AASHA, the government had signed off on a combination of measures: the price support scheme, the so-called price deficiency payment scheme and allowing of private firms to act as a buyer on behalf of the government on a trial basis.

These measures failed because the levels of procurement were insufficient to lift market rates fully, said economist R. Mani of the Tamil Nadu Agricultural University.

“The new proposals are aimed at ensuring that the government is able to quickly and effectively intervene in private markets when prices fall so that the rates for farmers improve,” the official cited above said. The government is likely to expand its procurement operations in states where they have been traditionally weak.

MSPs are effectively implemented only in Punjab, Haryana and Madhya Pradesh for wheat and Andhra Pradesh, Chhattisgarh, Punjab and Haryana for rice. Farmers in other states hardly benefit from MSPs, as there is either a very small or no presence of government procurement agencies.

The 70th round of the National Sample Survey for 2012–13 revealed that only 32.2% of paddy farmers and 39.2% of wheat farmers in the country were aware of MSPs, while only 13.5% of paddy farmers and 16.2% of wheat farmers sold their produce to government agencies.

According to economist Ashok Gulati, doubling of farmers’ income would require agriculture to grow between 13% and 15% a year in the remaining four years until 2022, in contrast to a trend growth of just 3%.

First Published: May 31, 2019 07:45 IST