THE GIST of Editorial for UPSC Exams : 07 JANUARY 2019 (An answer to rural distress)

An answer to rural distress

Mains Paper 4: Economy
Prelims level: Agricultural Produce Marketing Committees
Mains level: Major crops cropping patterns in various parts of the country, different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints.

Context

•  The most pressing problems facing the Indian farmer are the persistently low market prices.
•  From onions to potatoes and pulses to oilseeds, prices of most crops are much below expectations and normal trends.
•  Ideally, the solution lies in holistic and broad-based agri-market reforms. The stranglehold of the Agricultural Produce Marketing Committees (APMC) needs to be broken, the Essential Commodities Act (ECA of 1955) requires reforms.

Initiatives taken by the government

•  The negotiable warehouse receipt (NWR) system has to be scaled up, value-chains based on the Amul model are needed for most crops, land laws need to be less restrictive, contract farming should be promoted and agri-exports are in need of a conducive environment to grow.
•  The prime minister has initiated reforms in some of these areas; they need to be broadened before they can deliver.
•  However, these reforms entail a long gestation period and with the Lok Sabha elections barely four months away, demands for quick-fix solutions are increasing.

What are the solutions?

•  Three significant solutions have been doing the rounds.
•  Higher minimum support prices (MSPs), loan waivers, and direct income/investment support.
•  In this article, we evaluate the three to identify one that can be a winner, both politically and economically.
•  For political acceptance, we evaluate the scheme for its reach among the targeted beneficiaries, the farmers, and, for economic viability, we compare costs and benefits.

Conclusion

•  The PM promised a loan waiver and higher MSPs for 23 commodities.
•  There was a difference, however, in the MSP increase formula offered by the two parties.
•  While the Congress promised an MSP increase of 50 per cent that is, the comprehensive cost, PM Modi promised the same increase.
•  That is the paid-out costs plus family labour. It may be noted that it is about 38 per cent.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) Which of the following provides a safety valve against unanticipated liquidity shocks to the banking system?
A. Reverse Repo Rate
B. Open Market Operations
C. Cash Reserve Ratio
D. Marginal Standing Facility

Answer: D

Mains Questions:
Q.1) An income transfer policy combined with direct cash transfer is the best way to help the farmer. Critically examine the statement.