Old ideas, no solutions

Some of NITI Aayog's proposals for farm economy defy logic

Some of the key suggestions for lifting the farm economy, mooted by the National Institution for Transforming India (NITI) Aayog in its recently released “Strategy for New India@75”, do not make much sense. The propositions that defy logic include conversion of the Commission for Agricultural Costs and Prices (CACP) into an agricultural tribunal; replacement of minimum support prices (MSPs) with minimum reserve prices (MRPs) for auctioning the farm produce; and setting up government collection centres and warehouses at the village or block level. It is unclear as to what purpose will be served by turning the CACP into a tribunal in line with the provisions of the Article 323(B) of the Constitution. Tribunals are meant basically to adjudicate the disputes and not for going into issues like crop prices which should, typically, be dictated by the dynamics of demand and supply in the domestic and international markets. 

At present, MSPs are worked out by the CACP keeping the farmers’ interests, among other factors, in view. Though the NITI Aayog is right in acknowledging that the MSPs can only be a partial solution to boost the farmers’ income, their replacement with MRPs to serve as the starting point for auctions at mandis might prove even worse. Given the inefficiency of agricultural markets, diversity of trading systems and the hold of the middlemen over the farm commodities’ commerce, the reserve price-based auction system may not suit the farmers. Traders operating in the regular mandis, cartelised as they are, would simply refuse to quote higher bids to force the farmers to sell their produce to them outside the market premises at throwaway prices. The Aayog’s plea for crop collection and storage facilities at the village level, too, sounds utopian. Despite the best efforts and heavy investments over the past several decades, the crop procurement and storage infrastructure has failed to expand beyond a few wheat and rice growing regions. Thus, its overall recipe to mitigate farmers’ distress by doubling their income lacks the kind of out-of-the-box ideas which are expected of a think tank of this stature.  

Some of the other proposals in the blueprint for farm income growth are useful, even if not novel. The NITI Aayog’s plea to end power and water subsidies and, instead, offer fiscal sops for micro-irrigation (like drip irrigation) is one among them. So is, of course, the stress on evolving coherent and stable agricultural export policies, ideally with a time horizon of five to 10 years. Such a policy regime is imperative to create a reliable export window as an outlet for the surplus farm produce. However, the recently announced national policy for agri-exports does not conform to this principle. It has ample room for restricting exports at any time to manage the domestic prices of mass-consumed farm items. 

This apart, the NITI Aayog has done well to call for diluting the Essential Commodities Act, promoting contract farming, encouraging futures trading for better price discovery and facilitating sale of farm produce at relatively higher prices in the off-seasons. Also welcome is the recommendation to confer full-fledged infrastructure status on the post-harvest value chain of warehouses, pack-houses, ripening chambers and cold stores to enable them to access the available fiscal incentives. But most of these have been talked about earlier — it’s high time they are taken up for execution.