Assocham charts steps to overcome El Nino

The impact of El Nino on food prices likely to be minimal as India has stock of 53 mn tonnes cereals, which is about 250% of prescribed buffer requirement

The Associated Chambers of Commerce and Industry of India (Assocham) has suggested the Centre should plan policies in advance to avoid any negative impact of an expected drought this year.

According to the report- El Nino, Drought and Growth Concerns of the Indian Economy- the industry body said, "Despite the preparedness of the nation in terms of more than adequate food grain stocks and water in the reservoirs, there exists enormous challenge of containing the socio-economic consequences associated with the drought, and on accomplishing the policy action required in this regard". A copy of the report has been submitted to Tamil Nadu chief minister J Jayalalithaa.

As of now, the country was having sufficient water level in reservoirs and an ample foodgrain stock. The impact of El Nino on food prices is expected to be minimal as India has stock of 53 million tonnes of cereals, which is about 250 per cent of the prescribed buffer requirement.

Besides, agriculture in north India is mostly irrigated and is less rain-fed. Therefore, the impact of bad monsoon would be minimal on this region. However, agriculture in some parts of south India and most parts of west and central India is heavily rain-fed. These regions cultivate oil seeds, cotton and soybean prominently, it said.

The government must expand the farm insurance cover and advice banks and financial institutions to settle crop insurance claims in the drought-hit areas without delay. High quality seeds of alternative crops must be distributed among farmers in the drought-affected areas, it suggested.

It must realistically assess the ground level situation in order to estimate the shortfall of oilseeds and pulses and help traders with market intelligence. It should also bring down the cereals' inflation by liquidating the extra stock it was holding, which is way above the buffer requirement.

The body suggested scrapping the APMC Act and allow free flow of agriculture goods among the states. This would help bridge the mismatch of demand and supply of goods, which is the underlying factor contributing inflation, it said.

The distribution of pulses through public channels at subsidised prices as was done in 2008 to all the households is needed. The government should also provide the fuel subsidy that enables farmers to provide supplementary/alternative irrigation through pump sets in the drought and deficient rainfall areas to protect the standing crops.

It should also initiate structural and institutional reforms in agriculture. Facilitating private investments in agriculture and farmer producer organisations would boost the supply response in agriculture and save on large wastages in the supply chains besides tapping the unexploited irrigation potential.