NITI Aayog's recommendation on agri sector tough to implement: Experts

The recommendation on replacing the MSP with a minimum reserve price, which acts as a floor for auction in mandis, will also be difficult to implement, given the multiplicity of mandis in India

The NITI Aayog’s main recommendations for the farm sector might be difficult to implement and could also bring back an era of controls into the farm sector, said experts and econo

mists.

The Aayog advocates converting the Commission for Agricultural Costs and Prices (CACP) into an agri tribunal along with setting a floor price for auction in mandis.

The recommendation on replacing the minimum support price with a minimum reserve price, which acts as a floor for auction in mandis, will also be difficult to implement, given the multiplicity of mandis in India and their wide geographical spread, they said.

According to some estimates, India has over 28,000 small and large mandis, of which as many as 7,557 (principal – 2,428; sub-markets – 5,129) are regulated under the respective state Agricultural Produce Market Committee Acts.

At a time when the Ministry of Commerce has come out with an agriculture export policy that interestingly retains the right to clamp down on export of essential items as and when the need arises, the Aayog, in its three chapters on agriculture, has also mentioned having a stable farm export policy with a 5-10-year horizon and built-in provision to review the same from time to time.

It has also called for a modern agriculture advisory service on the lines of the United States Department of Agriculture (USDA) to accurately make production and price estimates ahead of sowing or the harvest season to give a signal to the farmers.

“It is not clear to me how replacing the CACP with a tribunal, according to Article 323B of the Constitution, will help and can be implemented. A tribunal usually is meant to adjudicate between parties, and if the CACP is converted into a tribunal for settling disputes in procurement, production, distribution, and supply of essential commodities between beneficiaries and government, it will end up being caught in a pile of legal cases,” Mahendra Dev, director of Indira Gandhi Institute of Development Research and a former chairman of CACP, told Business Standard.

Article 323B of the Indian Constitution empowers the Parliament of India or the state legislatures to set up tribunals for matters that include production, procurement, supply and distribution of foodstuff (including edible oilseeds and oils) and such other goods as the President may, by public notification, declare to be essential goods, among other things.

“Any form of control on markets and prices, either through setting up a floor price for auction or any other manner, goes against the fundamentals of price discovery and demand and supply, and isn’t in the interests of farmers in the long run,” said former agriculture secretary Shiraz Hussain. He said if farmers are restricted from mandis, the auction would shift outside the organised trading plaforms.

However, the Aayog’s recommendations of having a stable export policy with a 5-10 year horizon and developing a robust system for price and production and demand projection on the lines of USDA found favour with experts.