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What Narendra Modi's new government needs to do for farm sector

Ashok Gulati     May 26, 2014

Ashok Gulati, Chair Professor for Agriculture, ICRIER lists out five issues that the new Narendra Modi government needs to address in the farm sector:

Expand irrigation coverage: In a country where agriculture is an important activity both for food security and employment, only 35-40 per cent irrigation is assured. For the rest we depend on monsoon which is uncertain. The government must spend on expanding irrigation. Money for the same can come from rationalising the food and fertiliser subsidy and bringing down MNREGA expenditure.

Reduce wastages: Inflation is being driven by fruits, vegetables, milk and meat. The supply-side response will take time. But the immediate focus should be to bring down wastages and add to supplies. This can be done by building back-end infrastructure.

Commercialise domestic R&D:
We are heavily relying on imported R&D in agriculture such as Bt Cotton. Our own Pusa Basmati has transformed the basmati rice farming and industry. We must encourage domestic research and development in agriculture.

Streamline food management system:
The government has been stocking grains way above the norms. There is huge inefficiency in food grain management, leading to high food subsidy and fiscal deficit. The open market availability of grain is impacted. The government should release 15-20 million tonnes of grain in the open market. The Food Corporation of India has a high cost structure and private players should be roped in for procurement and management of grains.

Streamline taxes and levies on food grains: The grain procured in states like Punjab attracts high taxes of 14.5 per cent. There is no value addition but the archaic system at mandis results in high taxes. Taxes should be brought down to less than five per cent. Levy on rice millers should be abolished.

Ashok Gulati, Chair Professor for Agriculture, ICRIER

As told to Ajay Modi

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