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LATEST NEWS UPDATES | Farm policies for India -Ajay Vir Jakhar

Farm policies for India -Ajay Vir Jakhar

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published Published on Nov 22, 2017   modified Modified on Nov 22, 2017
-The Indian Express

Union government must address structural issues in agricultural policy, allow states greater autonomy.

Farmers from across the country are out on Delhi’s streets agitating just as the deliberations for the 2018 budget are beginning and it’s time to seek solutions to the structural issues that plague the system.

The “one-size-fits-all” policy created for the farm sector is self-destructive in design and programmes meant to double farmer incomes are collapsing. The Pradhan Mantri Fasal Bima Yojna (PMFBY) is a classic case where the best intentions of the prime minister were muddled in the policy’s fine-print. The PMFBY is designed to provide crop insurance and the Central government shares part of the premium subject to conditions. To receive the Central government’s share, the state has to walk the dotted line, come hell or high water; whether the region is rain-fed or irrigated; whether the cropping density is less than 100 per cent or upwards of 200 per cent. Simply allowing each state to design its own crop insurance scheme and yet receiving the Central government share of the premium would yield the desired results.

Similarly, an incentive of Rs 75 lakh per mandi is given by the Centre to the states for linking each market with E-NAM, the electronic platform for trading commodities. Much of the recorded turnover is, in fact, a sham. States like Haryana log in all FCI purchases as E-NAM transactions. Rather than force E-NAM on states, incentivising each state to have the electronic platform which meets the basic criteria of interoperability with other states is the correct path.

Recently, worried by the way the Regional Economic Comprehensive partnership (RCEP) for trade within Asia was shaping up, I advocated that the Central government shouldn’t negotiate international trade treaties on agriculture commodities without the consent (which differs from “consultation”) of state governments. I was told that as per the Constitution of India, trade negotiations are under the purview of the Centre, even though agriculture is in the domain of the states.

That is precisely the reason that every time food prices rise, the Centre intervenes to rein in inflation by facilitating the unhindered import of agricultural commodities. This constantly drives down farm-gate prices. But when prices fall, the Central government remains apathetic.

To offset these annual losses, states should demand that the Centre set a floor price for all such farm produce, where only the Central government shells out the shortfall between the market price and floor price via a “Price Deficiency Payment”. At present, farmers and states are penalised for the fallout of a policy not sanctioned by them and have to share the cost. Additionally, to prepare Indian farmers for global assimilation, funding for programmes such as the Rashtriya Krishi Vikas Yojna and the sub-mission on agriculture mechanisation should be doubled and the funding ratio should be changed from 60:40 to 80:20, where the Central government’s contribution rises to 80 per cent.

When different states announced farm loan waivers, banks were asked to provide farm loan data. Scrutiny of the data revealed the horrifying fact that public and private sector banks have indiscriminately given loans of over Rs one lakh crore to gullible farmers based on their asset value rather than economic viability. In the frantic quest to meet their own priority-sector lending targets, they have given these loans beyond the farmers’ scale of finance or actual value of crop sold each year by individual farmers. The culpability of banks has been established by the RBI through an in-house study conducted by the Financial Inclusion and Development Department — there was no way the loans could have been repaid. Now, that the malafide intent of the banks in giving loans to desperate farmers has been established, it’s time to institute a class action lawsuit for the complete waiver of all such farm loans. The question is: Which jurist will have the courage to accept such an audacious case and what will be the stand of the ministry of finance? Will it side with the poor farmers or with the banks which are too big to fail?

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The Indian Express, 21 November, 2017, http://indianexpress.com/article/opinion/columns/farm-policies-for-indian-agriculture-sector-pm-narendra-modi-4946854/


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