Govt readies mega pulses plan to rein in inflation, boost supply
The government is readying a new policy framework to rein in the inflationary impact and stabilise the supply of pulses, a widely consumed but scarce food item with economy-wide implications.india Updated: Jul 18, 2016 01:27 IST
The government is readying a new policy framework to rein in the inflationary impact and stabilise the supply of pulses, a widely consumed but scarce food item with economy-wide implications.
Three ministries – agriculture, food and finance – and the state-run policy think-tank Niti Aayog are coordinating efforts to frame the new measures that will see the government step in as one of the key importers of pulses.
“The goal is self-sufficiency in pulses. We are clear on that, whether it takes five years or six years,” farm minister Radha Mohan Singh said.
A panel led by chief economic adviser Arvind Subramanian will, for the first time, take a call on the minimum support prices (MSP) for pulses. MSPs are usually decided by the farm ministry-headed commission for agricultural costs and prices.
An MSP is the price at which the government buys produce from farmers, which also acts as the floor price for private traders. Higher MSPs incentivise farmers to grow more.
The government has hiked the support prices for pulses but they are still below market prices. This means farmers get far lower than what lentils sell for in the markets. “This will be addressed,” an official said.
The food ministry has proposed converting a recently set up stockpile of pulses into a permanent buffer, which should hold 10% of the country’s total output.
Rising food inflation is a major worry for the government not just because it roils household budgets but also acts as a hindrance to its growth agenda.
High inflation for instance limits scope for lowering of interest rates, needed to expand manufacturing. Wholesale inflation rose sharply to 1.6 % in June compared to a rise of just 0.8% in May. The increase in food prices quickened to 8.2% in June, compared to a 7.8% jump in May.
The food ministry has proposed steady imports through longer-term government-to-government deals rather than just “spot purchases”. As part of this, India has already signed a bilateral pact with Mozambique for growing and importing pulses. The Myanmar government is currently examining a similar draft agreement from India.
The supply of lentils, a common source of protein for the poor, has failed to keep pace with demand, because rising incomes have led to higher consumption of protein, analysts say.
The farm ministry has expanded the National Food Security Mission to cover all states. More than 90% of the funding under this programme will go to pulses.
“This year, Rs 1700 crore is being spent under the National food security mission. The allocation for pulses is Rs 1630 crores,” a farm ministry official said. This is nearly 95% of the total funds, he said. Separately, Rs 20 crore is being made available for new type of breeder seeds for pulses, he said.
Yet the challenges are steep. At an all-India level, just 16% of area under pulses has irrigation cover, compared to 58% for cereals.
India’s yield is low at 622 kg per hectare yield, compared to the world average of 1200 kg/ha. Moreover, most pulses varieties are long-yielding, which means they take a long time from sowing to harvest.