From plate to plough: A race to atone for neglect of the farmer (The Indian Express)

Mains Paper 3: Economy
Prelims level: Agri-GDP gowth
Mains level: Agriculture

Context

•  The Narendra Modi government has already announced a package of Rs 75,000 crore for about 12.6 crore small and marginal farmers.
•  While in absolute terms, this looks sizeable, once it is divided by the number of farm families to be covered, the amount is very small just Rs 6,000 per family per year, which is about 6 per cent of their annual income.
•  This level of support, unless augmented further, may not go far in winning the farmers’ confidence.
•  Most would agree that farmers have been under stress for quite some time, and have not got justice so far.

The perspective of agri-GDP growth in India

•  The average annual agri-GDP growth in the first four years of the Modi government, for which data is available, is just 2.5 per cent compared to 5.2 per cent in the last four years of the UPA government.
•  The exports of agri-produce have fallen since the peak of $42.5 billion, achieved in 2013-14, to a negative growth in agri-exports during the Modi government’s tenure.
•  On the other hand, agri-imports have consistently risen, reducing the net export surplus (exports minus imports) from about $25 billion in 2013-14 to less than $10 billion in 2017-18.
•  This has led to a glut of agri-produce at home and, consequently, prices have fallen, reducing the profitability ratio across most crops significantly, since 2013-14. And so also is the case with dairy.
•  The government is saddled with massive stocks of grains, far above the buffer stock norms.
•  Rice stocks with government agencies touched about 37 MMT on January 1, as against a buffer norm of only 7.6 MMT for that date. This speaks of massive inefficiency in the grain management system.

Steps need to be taken by the government

•  India wants to compete with China and become a force in the world.
•  It cannot do so unless it supports its farmers in a systematic manner. The Producer Support Estimates (PSEs) of India, China and the OECD clearly show that India has been implicitly taxing its farmers through restrictive trade and marketing policies.
•  On the contrary, China supported its farmers to the tune of $232 billion and the OECD countries by $235 billion in 2016-17 alone.
•  No wonder China produces more than triple of India’s agri-output from a lesser cropped area.
•  Food subsidy for consumers is Rs 1,84,220 crore and the MGNREGA is budgeted at Rs 60,000 crore in the current Union budget.
•  On top of this, there are the pending bills of the Food Corporation of India, which amounted to about Rs 1.35 lakh crore in April 2018, and may not be much less in April 2019. So, in a way, for the so-called “poor”, the safety nets cost anywhere between Rs 3.5 to 4 lakh crore.

Conclusion

•  The problem is that food subsidy covers 67 per cent of the population, with massive leakages.
•  This needs restructuring and rationalisation.
•  This can be diverted to farmers.
•  Similarly, put the fertiliser subsidy directly into the accounts of farmers, and let them choose whether they want to do organic farming or use chemicals.
•  DBT through cash in farmers’ account with linkage to Aadhaar, their bank accounts, geo-tagging of farms, and updating of land records is a better way to support farmers than loan waivers and unduly high MSPs.
•  It may be noted that this is not a substitute to either the structural reforms or investments that are needed in agriculture. In fact, this is a sort of atonement for not acting on those fronts.

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General Studies Pre. Cum Mains Study Materials

Prelims Questions:

Q.1) With reference to Tax Buoyancy, consider the following statements:
1. The responsiveness of Gross Tax Revenue to the changes in GDP is referred to as the Tax Buoyancy.
2. If tax buoyancy is more than 1, then it means that the growth rate of tax revenue is higher than the growth rate of GDP.

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

Answer: C

Mains Questions:
Q.1) To what extent the structural reforms and investments needed in the agriculture sector. Discuss it.