Even as the union finance minister, Arun Jaitely exudes confidence that the government will be able to stick to the fiscal deficit target for the current year, it is battling the consequences of ballooning food subsidy. In particular, it is making all possible efforts to shield the former from the negative effects of the latter. The food subsidy arises because of the overarching commitment of the government under the National Food Security Act [NFSA] to provide food to over 2/3rd of the population at heavily subsidized price of Rs 1/2/3 per kg for coarse cereals, wheat and rice. The cost of procurement, storage and distribution being much higher, the differential amount represents the subsidy. The Food Corporation of India [FCI]...
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Category: Pricing Policies & Subsidies
Cure worse than the disease
The Maharashtra Government’s bid to ensure good crop price for farmers is laudable but this must not be done by excessively penalising errant traders. Other options must be explored In August, the Devendra Fadnavis Government approved several amendments to the Maharashtra Agricultural Produce Marketing (Development & Regulation) Act, 1963, to bring it in line with the Centre’s model of Agricultural Produce and Livestock Marketing (Promotion & Facilitation) Act, 2017. As a result, the entire State was declared as a single market. Now, instead of the earlier rule, where traders would require separate licences for operating in each ‘notified’ APMC market, they will now need a single license that will enable them purchase agricultural produce from any mandi within the State. This is a good...
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Addressing farmers’ woes – middleman holds the key
In recent years, the Modi – government has increasingly faced the wrath of farmers all over the country with the last year alone having seen over half-a-dozen protests. On October 2, 2018, in a major show of strength, thousands of farmers from Uttar Pradesh [UP], Haryana, Punjab, Uttarakhand had congregated on Delhi border with close to dozen demands. These included:- Implementation of Dr MS Swaminathan headed Nation Commission on Farmers recommendations; Purchase of all of farmers produce at notified minimum support price [MSP]; Greater role to farmers producer organizations [FPOs] in food procurement; Waiver of all outstanding farmers loans; Payments of all outstanding arrears to sugarcane farmers; Enforcement of minimum wage for all farm workers; Giving pension to all farmers...
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Unable to pay MSP, face one-year jail term
Last month, the Devendra Fadnavis government approved amendments to the Maharashtra Agricultural Produce Marketing [Development & Regulation] Act, 1963 to bring it in line with the Centre’s Model Agricultural Produce and Livestock Marketing –[Promotion & Facilitation] Act, 2017. As per the amendment, the entire state is declared as a single market instead of the earlier rule of notifying “market areas” where sale/purchase of farm commodities could take place. Henceforth, a trader will need a single license enabling him to purchase agricultural produce from any mandi within Maharashtra. This is a good decision that can help farmers realize a better price. In yet another decision, the Maharashtra government has made purchase of a farm commodity below the official minimum support price [MSP] a...
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Sugar-cane mess – let market forces deal with it
The arrears of sugarcane farmers [money that sugar mills owe to them for their cane supplies] running into thousands of crore has been a perpetual headache for the ruling establishment both at the centre and states. Last year, in the run up to assembly elections in Uttar Pradesh [mills owe the maximum amount to farmers in this state], Modi had promised immediate payment of all arrears and for the future, ensure release of payment by 14th day counting from the day the cane is delivered to the factory. On assumption of office, the BJP government led by Yogi redeemed the commitment by clearing all arrears. Yet, last month, BJP lost the Kairana by-election to Lok Sabha. A major reason for...
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Farmers on agitation, despite Modi’s all out help
A ten day nation-wide protest [beginning June 1] by farmers that involves refusal to sell their crop to consumers and block movement to cities would suggest that they are in deep distress. This is completely out of sync with what Modi – government as also the states ruled by BJP are doing to increase farmers’ income and provide them security. In this regard, major steps implemented by it during the last 4 years, may be put under three broad categories viz. (i) enhancing crop output; (ii) ensuring a good/remunerative price; (iii) providing insurance against natural calamities. As regards (i), Modi – government has taken up on a war scale implementation of 99 irrigation projects aimed at reaching water to farmers’...
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Union’s fiscal budget held hostage by NFSA
Recently, Union Minister for Consumer Affairs, Food & Public Distribution, Ram Vilas Paswan informed that the Government will not affect any increase in issue prices for food-grains under the National Food Security Act [NFSA] till June, 2018. Under the Act, 5 kg of cereals per person per month is made available at heavily subsidized price of Rs 3 per kg rice, Rs 2 per kg wheat & Rs 1 per kg coarse cereals to 67% of India’s population [75% rural & 50% urban] or over 800 million persons. These prices shall be valid for a period of 3 years from the date of commencement of the Act and, thereafter, may be revised by the Central Government. The NFSA came into...
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Farm price, market assurance will bloat fiscal deficit
Stung by depressed price-realisation by farmers, much below the minimum support price (MSP), and with impending general elections next year, the Narendra Modi government announced in the Union Budget for 2018-19 that henceforth, they will be assured MSP which is at least 1.5 times the cost of production. Mere assurance of a remunerative price is of no use unless the farmer is able to sell his entire produce at this price. Keen to ensure that this happens, the government asked NITI Aayog to come up with suggestions. The latter prescribed three alternatives, namely: market assurance scheme (MAS) or price deficiency payments or incentives to private sector to buy farmers’ produce at MSP. Under MAS, agencies of the state buy the...
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Assuring MSP – MAS hugely negative for centre and state budgets
Stung by depressed price realization by farmers much below the minimum support price [MSP] and impending general elections next year, Modi – government announced in the Union Budget for 2018-19 that henceforth, they will be assured MSP which is at least 1.5 times the cost of production. Mere assurance of a remunerative price is of no use unless the farmer is able to sell his entire produce at this price. Keen to ensure that this happens, the government asked NITI Aayog to come up with suggestions. The latter prescribed three alternatives viz. market assurance scheme [MAS]; deficiency payments and incentives to private sector to buy farmers produce at MSP. Under MAS, agencies of the state buy the produce directly from...
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ANOTHER EMPTY PROMISE TO FARMERS?
The Government’s commitment to ensure a MSP for crops that is equal to 1.5 times the cost of production is much ado about nothing. Interests of farmers are well protected under the existing mechanism of fixing MSP. The need is to focus on ensuring that they get it on ground zero In its 2014 poll manifesto, the Bharatiya Janata Party had promised to guarantee farmers a price equal to 1.5 times the cost of production. However, the promise came too late, when Union Finance Minister Arun Jaitely made the announcement in the Budget speech for 2018-19. Later, replying to a debate in Parliament, Jaitely clarified that the production cost would be taken as actual paid out cost plus imputed value of family...
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