Fixing minimum support price (MSP) higher than market and international prices is a major problem leading to excess production of wheat, rice and sugar in the country while there is a deficit of edible oil, Minister for MSMEs and Road Transport & highways Nitin Gadkari said.
As a result of price intervention, on the one hand granaries overflow creating storage problems and on the other edible oil worth about Rs 90,000 crore is being imported.
Moreover, the government has to give subsidy, Rs 6,000 crore in the current fiscal, to export sugar so that pending dues of sugarcane farmers can be cleared.
"The most important problem in this sector is international price for agricultural commodities. And there is a vast difference in the price in the market and the MSP. There are a lot of problems, some political problems are also there. It is very difficult for government to take decisions. But the ground reality is that our MSP is higher than the market price and international price," Gadkari said while addressing a webinar.
The webinar was organised by National Institute of Public Finance and Policy (NIPFP) & Council on Energy Environment & Water (CEEW) to launch a report titled Jobs, growth and sustainability: A New Social Contract for India's Post-COVID-19 Economic Recovery.
Gadkari also called for changing crop patterns in some states such as Punjab, Haryana and Uttar Pradesh and termed the excessive production of wheat and rice a major problem.
"In agriculture we are facing serious problem. We have surplus rice, surplus wheat for three years. We don't have place of storage for rice. It is totally full. For sugar also there is surplus. That is a big problem," Gadkari said.
While noting the need to put policy focus on agriculture, tribal areas and 115 inspirational districts, the Minister said that there was enough scope to raise production of bio-ethanol, fish and honey.
He said that ethanol production could be raised to Rs 1 lakh crore from Rs 20,000 crore now using the 200 closed sugar factories.
"I have suggested to prepare a policy and cabinet note where we can convert rice into bio-ethanol. The present ethanol turnover is Rs 20,000 crore and imports Rs 6-7 lakh crore. So, now we are planning to make our ethanol economy Rs 1 lakh crore. We have 200 sugar factories which are already dead and those factories can be converted into bio-ethanol," he said referring to a meeting he held with a group of secretaries.
Seeking to promote rural economy in a big way, the Minister said that the government was working on schemes for women to give them solar charkhas and trawler to fishermen to help them scale up fish production and export.
Gadkari stressed on import substitution and cited the examples of PPE kits, masks and sanitisers where the country was in the position now to export. He said that there were items such as aviation fuel where import substitution can happen by using biofuel.
Emphasising on government's "Vocal for Local" campaign, the Minister said that honey was another area where there were huge prospects of raising farmer income.
He said that honey 'Goras Pak' biscuits made in Wardha using cow milk, ghee and honey were quite popular and there was a huge opportunity of exports.
The Minister has requested Mother Dairy to try and start a project in the area to make products using honey, cow milk and other local items.
The Minister for Highways and Road Transport continues to remain bullish on meeting higher road construction target even as coronavirus pandemic has slowed down construction activities.
"My target for two years is making roads of Rs 15 lakh crore. We have just signed an agreement with a foreign bank for getting credit. So, it's on public private investment. There are 480 projects with me which are economically viable and my toll is coming at Rs 28,000 crore per year. Within five years my toll income from NHAI would be Rs 1 lakh crore," Gadkari said.
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