THE GIST of Editorial for UPSC Exams : 03 June 2020 (Farm sector’s 1991 moment (Indian Express))

Farm sector’s 1991 moment (Indian Express)

Mains Paper 3:Economy
Prelims level: Essential Commodities Act
Mains level: Contract farming and its problems in India

Context:

On May 15, the finance minister announced a string of reforms that promise to completely change the country’s farm sector, and more importantly the lives of millions of farmers.
As part of the third tranche of the economic stimulus package announced to counter the impact of the Covid-19 pandemic.

Three major reforms were set in motion:

A host of agriculture commodities................................................................................................

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Historical context of the farm sector reforms:

For over seven decades, save for the Green Revolution initiated in the late-sixties to the early-seventies, the Indian farm sector has not seen any major reform. All discussions around this subject have been subordinated to the larger agenda of food security.
Over the decades, the contribution of agriculture to the overall national GDP has continued to fall steadily.
The sector continues to dominate the economy due to the sheer number of livelihoods it supports. Today, agriculture accounts for only a fifth of India’s GDP (around 17%) but provides a livelihood for nearly 50% of the working population.

Objective of the third tranche of the stimulus package:

In financial terms, the third tranche of the stimulus package aimed at India’s rural economy is set to be around Rs 1 lakh crore, a substantial part of which will go into building a more modern and efficient agricultural infrastructure. But, the centre-piece of the latest round of measures are the new laws to promote contract farming.
The changes in the ECA and creating a ‘One Nation One Market’ will now allow private sector investment.

Need financial inclusion in contract farming:

Large scale contract farming backed by the financial muscle of the private sector will solve two of the oldest and most persistent challenges faced by the Indian farm sector, which is the scale of operations and diversity of farm produce.
Contract farming will allow large groups of small and marginal farmers to combine their efforts and resources to produce a single crop, thus, unleashing the potential of more modern and scientific agricultural practices.
Contract farming will also provide small farmers with a certain level of income guarantee, which until now, was provided by the government in the form of MSP. Moving away from the MSP regime will encourage farmers to diversify into more value-added products.

Impact from the private investors in the farm sector:

With the entry of private investors in the farm sector, the role of local mandis will be substantially reduced. Adopting a one-nation-one-market model, similar to the tax reforms that gave birth to the GST, will effectively address inefficiencies............................................................................................................

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Conclusion:

Agriculture is an ‘economic activity’ that deserves all the benefits that come with a market economy approach, including technology, innovation, world-class infrastructure, and above all, a lot less dependence on government policies.

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Prelims Questions:

Q.1)With reference to the Black Lives Matter (BLM) movement, consider the following statements:
1. Black Lives Matter (BLM) is an international activist movement, originating in the African-American community, that campaigns against violence and systemic racism towards black people.
2. BLM is largely decentralised and does not have a formal hierarchy.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2