Minimum Support Prices for Agricultural Produce

[op-ed snap] A new deal for the farmer


Mains Paper 3: Agriculture | Issues related to direct & indirect farm subsidies & minimum support prices

From the UPSC perspective, the following things are important:

Prelims level: Kisan Credit Card, Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), Mudra Scheme

Mains level: The idea of a basic pay for farmers and its plausibility


Farm distress and farmer suicides

  1. The neglect of Indian agriculture by the successive governments has been the cause of untold suffering of the Indian farmer
  2. According to Census 2011, 54.6 per cent of India’s workforce was engaged in agriculture
  3. However, the sector contributes less than 17 per cent of the GDP
  4. The policies of successive governments have failed to correct this imbalance
  5. This has led to large-scale farmers suicides and spawned unprecedented agrarian unrest in many parts of the country

Urgent interventions required

  • Farmers must receive expert advice by trained officials at their doorstep at the beginning of every crop season
  1. These recommendations should be related to issues like which crops to sow, technology, market prices, soil fertility, irrigation
  2. Agricultural extension services are almost non-existent today
  • Trade bans on agricultural exports must be removed
  1. Such restrictive policies keep domestic prices low, harming farmers’ interests
  2. Farmers should have free access to global markets, as it will help augment incomes
  3. Restrictions, if any, should be imposed only in emergencies
  4. As for domestic trade, all restrictions on inter-district and inter-state movement should be removed
  • Every farmer family must have a Kisan Credit Card (KCC)
  1. According to the NABARD, the cumulative number of KCCs issued since inception till March 31, 2015, is 14.64 crore of which operative/live KCCs are 7.41-crore
  2. Counter-posing this against the 13.83 crore operational land holdings (Agricultural Census 2010-11) shows that a large number of farmers are yet to be covered under the KCC scheme
  • Rainwater harvesting should be incorporated in irrigation projects, owing to its magnificent untapped potential
  1. According to the Standing Committee on Rural Development, only 10 per cent of the projects taken up under the watershed development component of the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) have been completed so far
  2. The establishment of micro, small and medium irrigation projects like tube wells and check dams, instead of big irrigation projects should be encouraged and financed entirely by the Centre
  • A “paani panchayat” should be established for every scheme, which will act as a specialised registered body responsible for the execution of irrigation projects
  1. The panchayat will be responsible for the maintenance of water channels and collecting user charges from the beneficiaries
  2. This will help in the augmentation of self-financing water management mechanism
  3. It could also act as cross-panchayat body wherever applicable, for example, in cases where more than one beneficiary panchayat exists under a particular irrigation project
  • Minimum basic pay to farmers
  1. Every small and marginal farmer and every agricultural labourer above the age of 60 should receive a monthly pension of Rs 5,000
  2. All small and marginal farmer households, including tenant and sub-tenant farmers, should receive a basic income of Rs 6,000 per acre per crop season. This will work out to Rs 12,000 per household per annum
  3. Farmers holding land in excess of 5 acres of irrigated land, who produce disposable surplus and take advantage of the minimum support price may not be included in the scheme. For unirrigated holdings, the limit could be 10 acres
  4. The total financial burden of this scheme, likely to be Rs 1.84 lakh crore, could be distributed in the ratio of 70:30 between the Centre and the states
  5. The financial burden on the Centre will thus be Rs 1.29 lakh crore, less than 1 per cent of the country’s GDP
  6. The total expenditure budget of the Government of India in 2018-19 is Rs 24.42 lakh crore
  7. It is therefore not difficult to find this money within the resources available to it with better expenditure management
  8. However, even if this adds to the fiscal deficit it will be a worthwhile step because it will make the farmers happy and increase their productivity
  • Food processing
  1. There should be a separate category of entrepreneurs under the Mudra Yojana who will set up processing and storage plants for agricultural units
  2. With a low rate of interests on loans ranging from 3.5 per cent to 6 per cent, small and medium enterprises for storage and processing can aid the development of infrastructure for the agriculture sector

Way forward

  1. A Basic Income Scheme for the farmer will not tax the government’s resources
  2. But it could stem the tide of distress in the countryside
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