THE GIST of Editorial for UPSC Exams : 18 MARCH 2019 (Fielding the right incentives (Indian Express)

Fielding the right incentives (Indian Express)

Mains Paper 3: Economy
Prelims level: PM -Kisan
Mains level: Agriculture improvement and its impact

Context

•  ‘Pradhan Mantri Kisan Samman Nidhi’ (PM-Kisan) scheme of Rs 75,000 crore for small and
  marginal farm families.
•  The target is to cover about 12.6 crore beneficiary farm families by the end of March 2019.
•  Although the amount involved per family is too little, and coming too late, yet direct income support (DIS) marks the beginning of a new policy direction.
•  It can reach about 86 per cent of farm families compared to loan waivers that can benefit a maximum of 30 per cent of the peasantry and higher MSP policy which can benefit a maximum of 10-15 per cent of peasantry.
•  Similar moves towards DIS for farmers have been made by a number of states, especially Telangana (Rythu Bandhu scheme), Odisha (KALIA scheme), West Bengal (Krishak Bandhu), and Jharkhand (Krishak Aashirwad Yojana).

Pros and Cons with such policies

•  Each one has its pros and cons, and can be improvised in due course.
•  In any case, it may be worth pointing out that such a policy of DIS is not a substitute, but a complement, to agri-marketing reforms on the one hand, and raising investments in agriculture on the other, to make Indian agriculture more productive, competitive, inclusive, and sustainable.
•  It suggests that gross capital formation (public plus private) in agriculture, forestry and fishing (GCFA) as a percentage of agri-GDP (in current prices) dropped to the lowest level of 6.6 per cent in 1994-95, but gradually increased thereafter, touching a peak of 18.2 per cent in 2011-12.
•  Thereafter it started declining and stood at 13.8 per cent in 2016-17.
•  The share of public investments has gradually declined from 43.2 per cent in 1980-81 to 18.8 per cent in 2016-17 at current prices, and consequently, the share of private sector investments in agriculture has risen.
•  While the share of private investments in agriculture is overwhelming (81 per cent), they need the right incentives to go up further as a percentage of agri-GDP.
•  Producer Support Estimate (PSE), a measure that captures farmers’ incentives from output price front as well as budgetary allocations for input subsidies or any income support, was negative to the tune of 6.4 per cent of gross farm receipts.

Way forward

•  PM-Kisan scheme is only a small step to improve incentives for farmers.
•  The first step in that direction will be to change the policy mindset, and eliminate the inbuilt consumer bias in our food and agri-policies.
•  About 81 per cent of this comes from farmers who cannot realise the best prices for their produce due to restrictive trade and marketing policies.
•  Further, the food subsidies of Rs 1,84,220 need to be revisited to target it to the bottom 20-25 per cent of the population, rather than providing 90 per cent subsidy to 67 per cent of the population.
•  The investments need not be restricted to just augmenting agricultural production but also fixing its marketing infrastructure, logistics, as well as linking production by farmers’ groups to organised processing and retailing, with a view to minimise market risks, save wastages, and augment farmers’ price realisation.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) Which of the following cities are connected by the recently inaugurated 'Tamil Nadu Defence Industrial Corridor'?
(a) Chennai-Hosur-TiruchirappaliCoimbatore
(b) Chennai-Coimbatore-Tanjavur-Neyveli
(c) Madurai-Kanchupiram-RameshwaramKodaikanal
(d) Nagapattinam-Sivakasi-MamallapuramKanyakumari

Answer: A

Mains Questions:
Q.1) In order to double farmer’s income, India should encourage small holding farmers to boost investment in their farmers. Discuss.