Mains Paper 3: Economy
Prelims level: Agricultural Produce Marketing Committees
Mains level: Major crops cropping patterns in various parts of the country, different types of irrigation and irrigation systems storage, transport and marketing of agricultural produce and issues and related constraints.
• The most pressing problems facing the Indian farmer are the persistently low market prices.
• From onions to potatoes and pulses to oilseeds, prices of most crops are much below expectations and normal trends.
• Ideally, the solution lies in holistic and broad-based agri-market reforms. The stranglehold of the Agricultural Produce Marketing Committees (APMC) needs to be broken, the Essential Commodities Act (ECA of 1955) requires reforms.
Initiatives taken by the government
• The negotiable warehouse receipt (NWR) system has to be scaled up, value-chains based on the Amul model are needed for most crops, land laws need to be less restrictive, contract farming should be promoted and agri-exports are in need of a conducive environment to grow.
• The prime minister has initiated reforms in some of these areas; they need to be broadened before they can deliver.
• However, these reforms entail a long gestation period and with the Lok Sabha elections barely four months away, demands for quick-fix solutions are increasing.
What are the solutions?
• Three significant solutions have been doing the rounds.
• Higher minimum support prices (MSPs), loan waivers, and direct income/investment support.
• In this article, we evaluate the three to identify one that can be a winner, both politically and economically.
• For political acceptance, we evaluate the scheme for its reach among the targeted beneficiaries, the farmers, and, for economic viability, we compare costs and benefits.
• The PM promised a loan waiver and higher MSPs for 23 commodities.
• There was a difference, however, in the MSP increase formula offered by the two parties.
• While the Congress promised an MSP increase of 50 per cent that is, the comprehensive cost, PM Modi promised the same increase.
• That is the paid-out costs plus family labour. It may be noted that it is about 38 per cent.
Q.1) Which of the following provides a safety valve against unanticipated liquidity shocks to the banking system?
A. Reverse Repo Rate
B. Open Market Operations
C. Cash Reserve Ratio
D. Marginal Standing Facility
Correct Answer: D
Q.1) An income transfer policy combined with direct cash transfer is the best way to help the farmer. Critically examine the statement.