Enough with the lofty rhetoric (Mint)
Mains Paper 3: Economy
Prelims level: Covid-19 Package
Mains level: Indian Economy and issues relating to planning, mobilization of
resources, growth and development
Context:
- Details of the mega fiscal package of ₹20 trillion announced by the
prime minister are slowly being revealed by the finance minister (FM).
- It is increasingly becoming clear that it has less to do with the
immediate crisis of lives and livelihood and more to do with the long-term
agenda of reforms and development.
Focus on agriculture and allied sector:
- The third instalment focused on the agriculture and allied sector was no
different, with a lot of promises and budgetary support for agriculture,
although with no expiry date.
- Most of the reforms were also those which have been in discussion for
decades without much progress, although repeated every year in budget
speeches.
Need to provide incomes and food to the poor:
- It is clear that the stimulus is in the midst of a large and expanding
humanitarian crisis of hunger, starvation and poverty driven by declining
incomes.
- Therefore, what is of utmost importance is the need
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Sharp collapse of prices on the agricultural commodities:
- The other set of agricultural commodities such as sugarcane, maize and
soybean have already seen a sharp collapse of prices following demand
collapse and decline in international prices following collapse in petroleum
prices.
- Other than wheat harvest which has seen public procurement, most of
other crops have seen a sharp drop in farm gate prices.
- It has not happened because of lack of reforms but because of the
decline in demand due to the slowdown in the economy followed by the
aggressive lockdown which disrupted demand as well as supply chains.
No relevance on discussion and promise of reforms for farmers:
- Any discussion and promise of reforms has no relevance for farmers
struggling to realize profits having invested large amounts in cultivation.
- None of the reforms discussed would have any impact in the immediate
future, let alone the promised investments in agricultural infrastructure at
a time of uncertainty on the fiscal situation.
- It is worth remembering that the last five years of the National
Democratic Alliance (NDA) government has seen a real decline in investment
in agriculture despite these lofty announcements leading to a severe
agrarian crisis.
The reforms areas announced by the finance minister:
- As the FM pointed out, out of 11 announcements, 3 were only about
reforms.
- Among these, APMC reforms, online trading (e-NAM) and ‘One Nation One
Market’ have been talked about for more than a decade.
- The reality is that most of them have failed to take off due to lack of
investment and consensus on what constitutes reforms.
- The agenda of raising agricultural exports to
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What is needed?
- A participatory approach to resolving these and this will take time to
bring states on board but also large investments as against the track record
of declining real investments.
- The real issue is not whether these reforms are desirable or the nature
of these reforms but the relevance of showcasing them as solutions to the
current crisis.
- The same is true of the sectoral approach of
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Conclusion:
- Unlike the last two announcements where there was some financial
commitment from the government, although negligible, this set of
announcements did not have even that. Most of the financial commitments are
for future with no expiry date.
- Unfortunately, the crisis is not going to wait and the farmers are
unlikely to weather through this storm of demand depression in the absence
of fiscal expenditure and rising demand.
- Slogans, acronyms and vision statements, however profound, are unlikely
to be of any help unless the government decides to put its money where its
mouth is. And these need to be put on the table now and not in some distant
future.
