Whether it is MSP-based regime or DPPS, both are open-ended, susceptible to ever-increasing subsidy burden, and vulnerable to charge of violation under the WTO Two recent statements by the top brass give a clue as to how the Modi government intends to deal with pricing of farmers’ produce. First, addressing a conference on ‘Getting Agricultural Markets Right’ (July 6), Niti Aayog member Ramesh Chand proposed the adoption of deficiency price payment system (DPPS) as an alternative to the existing system of minimum support price (MSP). Next, the Union Agriculture Minister ruled out a legal guarantee for MSP. Under the existing system, agencies of the government, such as the Food Corporation of India (FCI), buy agri-produce, such as wheat, rice/paddy, coarse...
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Category: Agriculture & Foodgrain
Eliminating freebies: Who will bell the cat?
Freebies are a recipe for financial bankruptcy; the only way to avoid it is to prohibit political parties from promising them Hearing a public interest litigation (PIL), filed by advocate Ashwani Dubey, seeking directions against ‘freebies’—a euphemism for benefits distributed by political parties using public money for garnering votes—on August 3, 2022, the bench of Chief Justice of India NV Ramana and Justices Krishna Murari and Hima Kohli sought suggestions from all stakeholders. The stakeholders include beneficiaries and the people who are opposing these freebies, besides the government as well as organisations such as Niti Aayog, Finance Commission, RBI and Opposition parties, etc. The suggestions have been sought on the composition of a committee which can go into the issue...
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Let free market discover the price!
Deficiency price payment may be way forward as agri market forces are better placed to judge the value of agri products Addressing a conference on ‘Getting Agricultural Markets Right’ (July 6, 2022), Ramesh Chand, who is a Member of the Niti Aayog, proposed the adoption of deficiency price payment system (DPPS) as an alternative to the existing dispensation of procurement of crops from the farmers at minimum support prices (MSPs). What is the problem with the MSP-based regime? How will DPPS help in alleviating it? Under the existing system, agencies of the government like the Food Corporation of India (FCI) buy agri-produces such as wheat, rice/paddy, coarse cereals, from farmers at the MSP and distribute at a subsidized price of...
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Wheat export – policy flip flop
In the backdrop of increase in international price of wheat (courtesy, Ukraine crisis) early this month, Prime Minister Narendra Modi, had exhorted that India can help meet the global requirements of food deficit countries, provided the World Trade Organisation (WTO) allows it. He also exuded confidence that this had created an opportunity for Indian farmers to increase their income. Even as stakeholders were gearing to undertake export with several of them having signed contracts, on May 13, 2022, the Director General of Foreign Trade (DGFT) put a ban on wheat export with ‘immediate’ effect. The exports under government-to-government arrangements and contracts signed prior to May 13, 2022 are exempt. The government has sought to explain the ban in terms of...
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Food politics hits subsidy reforms
The Government should look at ways for pruning subsidy. Indeed, there is an unprecedented scope for it The Union Government has extended the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) for a further period of six months till September 30, 2022. Having already spent over Rs 260,000 crore during the first five phases (the scheme has been in operation since April 2020, the fifth phase ended on March 31, 2022), it will need another Rs 80,000 crore during April – September, 2022. Is the extension justified? In March 2020, the Finance Minister Nirmala Sitharaman had announced the Scheme to mitigate the hardship suffered by people due to a major disruption in economic activity and resultant loss of jobs and income...
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Time to revisit the three farm laws
When farmers get dozens of options to sell, plain common sense says that they are bound to get a good deal in every respect, including a good selling price While, staying the implementation of the three contentious farm laws, the Supreme Court (SC) had set up a Committee to recommend the way forward. The committee submitted its report on March 19, 2021. Even as the SC action on the report was pending, on November 19, 2021 Prime Minister Narendra Modi announced repeal of the laws even while maintaining that these laws are beneficial to small and marginal farmers who are in a majority. Now, in a startling revelation, Anil Ghanwat, a member of the committee has revealed that around 85.7...
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Farm laws – time to revisit
While, staying implementation of the three contentious farm laws, the Supreme Court (SC) had set up a Committee to recommend the way forward. The committee submitted its report on March 19, 2021. Even as the SC action on the report was pending, on November 19, 2021 Prime Minister Narendra Modi announced repeal of the laws even while maintaining that these laws are beneficial to small and marginal farmers who are in majority. Now, in a startling revelation, Anil Ghanwat, a member of the committee has revealed that around 85.7 percent of the 73 farmer organizations, representing more than 33 million farmers supported the laws. This should prompt the government to revisit the laws. Meanwhile, let us look at Committee’s recommendations...
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The Budget’s food subsidy conundrum
The subsidy currently covers 800 million and is meant for the poor. Heavily subsidised food is for the very poor. How can 2/3rd of Indians be very poor? In the Union Budget for 2022-23, the Modi government has allocated Rs 207,000 crore for food subsidy which is Rs 79,000 crore less than the actual expenditure of Rs 286,000 crore during 2021-22 as per the revised estimate (RE). Under the National Food Security Act (NFSA), 2013, the Union Government directs the Food Corporation of India (FCI) and other state agencies to procure food from the farmers at MSP (minimum support price) and organize its distribution to a mammoth population of 800 million people through an elaborate network of fair price shops...
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Food subsidy – conundrum
In the Union Budget for 2022-23, Modi – government has allocated Rs 207,000 crore for food subsidy which is Rs 79,000 crore less than the actual expenditure of Rs 286,000 crore during 2021-22 as per the revised estimate (RE). Under the National Food Security Act (NFSA), 2013, the Union Government directs the Food Corporation of India (FCI) and other state agencies to procure food from the farmers at MSP (minimum support price) and organize its distribution to a mammoth population of 800 million people through an elaborate network of fair price shops (FPS) at the subsidized price (call it ‘issue price’) of Rs 2, Rs 3 and Rs 1 per kg for wheat, rice, and coarse cereals, respectively. Each person...
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Farm laws needed to fill a void
There are 265 crops and the MSP guarantee will have to be given to farmers producing all these crops – this will be a disaster. Farmers celebrate following the announcement of suspension of their year-long protest against farm laws & other related issues, at Singhu border in New Delhi on Thursday. Credit: IANS Photo Following Prime Minister Narendra Modi’s announcement of the repeal of the three contentious farm laws on November 19, protesting farmers lost no time in coming up with a new charter of demands. The most potent of these is a legal guarantee for the minimum support price (MSP). Even as Modi proposed to set up a committee to recommend how MSP can be...
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