Even as Modi has demonstrated resilience while navigating other reform measures, on the three farm laws, he has refused to budge despite nearly 10 month long protest by farmers demanding their repeal. Here are the prime reasons. Let us start by referring to the results of a recent exercise termed “Situation Assessment of Agricultural Households and Land and Livestock Holdings of Households in Rural India” or in short SAS released by the National Statistical Office (NSO) covering the period July 2018 to June 2019. It reveals widespread dissatisfaction among farmers with the price realized from sale of their produce; it varies depending on the commodity. The shares of farmers dissatisfied are cereals: 25%; fruits: 28%; pulses: 32%; oilseeds: 35%; vegetables:...
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Category: Pricing Policies & Subsidies
Defending public stockholding program at WTO
In the run up to the 12th WTO (World Trade Organization) Ministerial Conference (MC-12) scheduled to be held from November 29, 2021, India has made two submissions; first, subsidies given for maintaining food security programs of developing countries should be allowed without any limit and second, member countries who give trade distorting farm subsidies in excess of US$ 10 billion should eliminate them within three years. India runs a mammoth program of Public Stockholding (PSH) for food security purposes. Under it, agencies of the Government like the Food Corporation of India (FCI) buy agri-produce such as wheat, rice/paddy, coarse cereals etc from farmers at the minimum support price (MSP) and distribute at a heavily subsidized price of Rs 1/2/3 per kg through...
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The ball lies in the farmers’ court
The demand for repeal of the Central laws is unwarranted. They open up multiple options that farmers can leverage for increasing price realisation While staying the implementation of the three farm laws enacted by the Union Government in January 2021, the Supreme Court had hoped that this would create a congenial atmosphere for the protesting farmers to come to the negotiating table and arrive at an amicable settlement. However, the purpose is far from achieved as certain farmers’ bodies are insisting on ‘repeal’ of the laws. This is overshadowed by yet any other demand that the Union Government should guarantee a minimum support price (MSP) backed by a law enacted by parliament. As the wording suggests, MSP is the minimum...
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Dealing with Delhi CM Kejriwal’s ‘ration mafia’
The scheme mooted by the Delhi Government will only create more avenues for the middlemen to make money at the cost of the taxpayer Arvind Kejriwal, Chief Minister, National Capital Territory (NCT) of Delhi has justified his much-trumpeted scheme for door-step delivery of ration on the ground that this will help rein in what he describes as ‘ration mafia’ while ensuring that every grain of the subsidized food reaches the person (read: the poor) for whom it is intended. Who is this ‘ration mafia’? How does it plunder the subsidized food? Can the scheme prevent it? Under the National Food Security Act, 2013, the Union Government directs the Food Corporation of India and other state agencies to procure food from...
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Dealing with ‘ration mafia’
Arvind Kejriwal, Chief Minister (CM), National Capital Territory (NCT) of Delhi has justified its much trumpeted scheme for door-step delivery of ration on the ground that this will help reining in what he describes as ‘ration mafia’ while ensuring that every grain of the subsidized food actually reaches the person (read: the poor) for whom it is intended. Who is this ‘ration mafia’? How does it plunder the subsidized food? Can the scheme prevent it? To get to the bottom of it, we need to see as to how the existing system of distributing food to the beneficiaries works. Under the National Food Security Act (NFSA) (2013), the Union Government directs the Food Corporation of India (FCI) and other state...
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How about reining in food subsidy?
Even as the Govt has mustered courage to give a truthful account of the money it spends on food subsidy, there is nothing on the horizon to indicate that this will be reined in In the Union Budget for 2021-22, Finance Minister (FM) Nirmala Sitharaman has given a pleasant surprise. This has to do with the Government’s decision to discontinue with the decades-old practice of so-called “off-Budget liabilities” this time around. “Off-Budget liabilities” is a fancy nomenclature used by governments to denote transfer of certain expenses incurred by the Union Government to the books of its agencies tasked with the implementation of its welfare schemes. This helps the former show lower expenses on its own books, thereby, helping it bring down fiscal...
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Legalising MSP will prove to be anti-farmer
Out of about 150 million farmers, a mere 8% of them get to sell their produce to the state agencies In the continuing stalemate over the three farm laws, the biggest sore point is the insistence of the agitating farmers that the MSP (minimum support price) should be legally guaranteed. At present, the Centre notifies MSP for 23 farm items. The Food Corporation of India (FCI) and other state agencies buy paddy and wheat, besides a few other items such as coarse cereals and pulses, at the MSP. These are meant for feeding the public distribution system (PDS) and giving food to beneficiaries at heavily subsidised prices under the National Food Security Act (NFSA). Out of about 150 million farmers,...
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Food subsidy – fudging stops, what about reining in
In the Union Budget for 2021-22, the Finance Minister, Nirmala Sitharaman has given a pleasant surprise. This has to do with the Government’s decision to discontinue with the decades old practice of so-called “off-budget liabilities”. A technique used by successive regimes in the past, this is a fancy nomenclature to denote transfer of certain expenses incurred by the Union Government to the books of its agencies tasked with the implementation of its welfare schemes. This helps the former show lower expenses on its own books thereby helping it bring down fiscal deficit to the desired level. A typical case relates to the Food Corporation of India (FCI) through which it administers its mammoth program of delivering food subsidy. Under the...
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Agri – reforms stymied, course correction needed
In an unprecedented order delivered on January 12, 2021, the Supreme Court (SC) has stayed the implementation of the three laws on agricultural marketing reforms enacted by the Modi – Government in September, 2020. The top court normally intervenes if a law passed by the Parliament is either beyond its legislative competence or is unconstitutional in as much as it violates the basic structure of the constitution. In the instant case, none of these reasons apply. In fact, the SC has not yet examined the constitutionality or otherwise of the laws (a petition in this regard is already pending with it). Then, what has prompted the court to take recourse to such an extraordinary step. Tens of thousands farmers –...
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Legalizing MSP is anti-farmer
The anger of agitating farmers over the three farm bills enacted in September, 2020 refuses to subside. Despite a categorical assurance by the Prime Minister, Narendra Modi that the MSP (minimum support price) will continue and that the government was prepared to give this in writing, they are unfazed. Their leaders are insisting that all sales of agricultural produce including those outside APMC (Agricultural Produce Market Committee) mandis – now permitted under the Central law viz. Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 – should be made at MSP and that this must be provided for in the Act. At present, the Centre notifies MSP for 23 agri-items, however, this MSP has no legal sanction. The Food...
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