Amidst a nationwide lockdown announced on March 24, 2020 to contain the spread of the coronavirus disease, even as an overwhelming share of the economic activity has come to a grinding halt, agriculture too has suffered a major jolt. The crisis has come at a time when Rabi crop (October 2019 – March 2020) mostly winter staple wheat, is ready for harvest. While on one hand-harvesting operation have suffered due to shortage of labour (courtesy, sudden stoppage of all modes of transport and workers getting stuck where they were), on the other, farmers are unable to move harvested crop to the market. According to an estimate, already they have suffered the loss of about Rs 15,000 crore (due to crashing...
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Category: Pricing Policies & Subsidies
Serve up a fresh NFSA
The 80 crore people the Govt currently targets for giving subsidised foodgrain under the Food Security Act includes millions of higher-income beneficiaries who don’t deserve it The Finance Minister, Ms Nirmala Sitharaman, announced a Rs 1,70,000 crore package under the PM-Gareeb Kalyan Scheme (PMGKS) to address the plight of tens of millions of workers in the “informal” sector affected by CoviD-19, on March 26. The most crucial component of this package was giving five kg of rice/wheat per person per month for “free” to around 80 crore people through the public distribution system (PDS), plus one kg of preferred and region-specific choice of pulse per household for three months. To understand the full implications of the relief — estimated to cost...
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Can Corona – crisis spur food reforms
To address the plight of tens of millions workers in the ‘informal’ sector viz. street vendors, craftsmen, construction workers, domestic help, agricultural laborers, self-employed etc affected by Covid – 19, on March 26, 2020, the finance minister, Nirmala Sitharaman announced a Rs 170,000 crore package under PM Gareeb Kalyan Scheme [PMGKS]. The most crucial component of this package is giving 5 kg of rice or wheat per person per month for ‘free’ to around 80 crore people through the public distribution system [PDS] plus one kg of preferred and region specific choice of pulse per household for 3 months. To understand the full implications of the relief which is estimated to cost the exchequer about Rs 50,000 crore, let us...
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Economic Survey 2020: Fudging food and fertiliser subsidy
Far from subsidy allocations coming down, as the Economic Survey had recommended, there is significant increase not reflected in govt balance sheets Economic Survey 2020: The food subsidy figure mentioned in the budget are reimbursements to FCI, and other state agencies engaged in similar operations on behalf of the Union. —————————————————————————————————– Economic Survey 2020: In the 2020 Economic Survey, released on January 31, the chief economic advisor (CEA), K Subramanian had recommended some reduction in food subsidy by limiting the scheme’s coverage, and increasing the issue price of foodgrains. One was, therefore, looking forward to announcement of a major reform in this regard in the Union Budget for FY21 presented by finance minister Nirmala Sitharaman the following day. While the speech...
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Drastic cut in food subsidy – real or fudged
In the Economic Survey [2019-20] released on January 31, 2020, the chief economic advisor [CEA], K Subramanian had recommended some reduction in food subsidy by limiting coverage of the scheme as also by increasing issue price of foodgrains. In this backdrop, one was looking forward to announcement of a major reform in this important area in the Union Budget for 2020-21 to presented by the Finance Minister [FM], Nirmala Sitharaman on the following day. Even as the speech was devoid of any such announcement, however looking at the numbers, one comes across the revised estimate [RE] of food subsidy for 2019-20 at Rs 109,000 crore – a steep decline of 40% from the budget estimate [BE] of Rs 184,000 crore...
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Loot in farmers’ name continues unabated
A high level committee on ‘road-map for agriculture and rural sector in the next five years’ has recommended corrective steps to reduce agricultural subsidies and use the money thus saved [it has estimated the savings to be Rs 10,000 – 15,000 crore annually] for investment in rural areas for creating livelihood opportunities by empowering Farmers- Producer Organizations [FPOs], Joint Liability Groups [JLGs] and making small and marginal farmers diversified producers. It has also suggested providing FPOs and other forms of collectives a proper eco-system to grow and diversify operations. The government spends close Rs 450,000 crore on agricultural and food subsidy every year. This includes food: Rs 175,000 crore; fertilizers: Rs 100,000 crore; PM-KISAN: Rs 90,000 crore; power [centre plus...
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Food subsidy – who are the beneficiaries
The Government is considering downward revision of ‘reserve price’ of rice from Rs 2,785 per quintal to Rs 2,250 per quintal for selling food under the Open Market Sale Scheme [OMSS] during the current financial year [FY] 2019-20. However, there is no plan for any revision in reserve price of wheat, and the current reserve price of wheat Rs 2,080 per quintal will continue to prevail throughout the remaining period of 2019-20. The scheme is run by the ministry of food civil supplies and consumer affairs to dispose off wheat and rice stored in buffer stock [also known as the ‘central pool’] kept by the Food Corporation of India [FCI] – the agency which is 100% owned by the Government...
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How sugar turns bitter for the consumer…
The Cabinet Committee on Economic Affairs (CCEA) has approved a proposal of the food ministry for creation of four million tons of sugar buffer stock between August 1, 2019 and July 31, 2020. The government will spend Rs 1,674 crore towards the cost of carrying the stock. The amount will be directly credited into farmers’ accounts on behalf of sugar mills against their cane price dues. It has also decided to keep the Fair and Remunerative Price (FRP) of sugarcane unchanged at Rs 275 per quintal. FRP is the minimum price which mills have to pay farmers to buy sugarcane – the raw material for making sugar. The price is applicable to sugarcane purchases made during the sugar marketing year...
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How sugar turns bitter for the consumer?
The Cabinet Committee on Economic Affairs [CCEA] has approved a proposal of food ministry for creation of 4 million tons of sugar buffer stock during August 1, 2019, to July 31, 2020. The government will spend Rs 1,674 crore towards the cost of carrying the stock. The amount would be directly credited into farmers’ account on behalf of sugar mills against their cane price dues. It has also decided to keep Fair and Remunerative Price [FRP] of sugarcane unchanged at Rs 275 per quintal. FRP is the minimum price which mills have to pay to farmers for purchasing sugarcane – raw material used in making of sugar. The price is applicable to the sugarcane purchase made during October 1, 2019...
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Are farmers happy under Modi?
In the follow up to BJP’s defeat in the three major states in central India viz. Madhya Pradesh, Rajasthan and Chhattisgarh last year, there was a widespread perception that a major factor behind this was resentment among farmers [besides the unemployed youth] with the alleged anti-farmer policies of incumbent governments in these states as also those pursued by the union government. Under Modi – dispensation, the prices of farm products had increased at a slower pace than those of the non-farm products or the ‘terms of trade’ moved against agriculture [a jargon used by economists to describe the phenomenon]. As a consequence, farmers’ income grew slower than non-farm income which – analysts argued – prompted them to vote against BJP....
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