[Editorial Analysis] Enough with the lofty rhetoric

Mains Paper 3: Economy
Prelims level: Covid-19 Package
Mains level: Indian Economy and issues relating to planning, mobilization of resources, growth, and development

Context:

• Details of the mega fiscal package of ₹20 trillion announced by the prime minister are slowly being revealed by the finance minister (FM).

• It is increasingly becoming clear that it has less to do with the immediate crisis of lives and livelihood and more to do with the long-term agenda of reforms and development.

Focus on agriculture and allied sector:

• The third installment focused on the agriculture and allied sector was no different, with a lot of promises and budgetary support for agriculture, although with no expiry date.

• Most of the reforms were also those which have been in discussion for decades without much progress, although repeated every year in budget speeches.

Need to provide incomes and food to the poor:

• It is clear that the stimulus is in the midst of a large and expanding humanitarian crisis of hunger, starvation, and poverty-driven by declining incomes.

• Therefore, what is of utmost importance is the need to provide incomes and food to the poor, migrants, and majority of the workers engaged in the agricultural sector.

• The FM pointed out, the lockdown has led to a sharp decline in demand for agricultural commodities, particularly perishable commodities. Unable to sell due to supply chain disruptions, most farmers had to resort to distress sale or destroying their produce.

• The decline in demand for milk was pointed out by FM but the same is true of a range of other agricultural commodities.

The sharp collapse of prices on the agricultural commodities:

• The other set of agricultural commodities such as sugarcane, maize, and soybean have already seen a sharp collapse of prices following demand collapse and decline in international prices following collapse in petroleum prices.

• Other than wheat harvest which has seen public procurement, most of the other crops have seen a sharp drop in farm gate prices.

• It has not happened because of a lack of reforms but because of the decline in demand due to the slowdown in the economy followed by the aggressive lockdown which disrupted demand as well as supply chains.

No relevance on discussion and promise of reforms for farmers:

• Any discussion and promise of reforms have no relevance for farmers struggling to realize profits having invested large amounts in cultivation.

• None of the reforms discussed would have any impact in the immediate future, let alone the promised investments in agricultural infrastructure at a time of uncertainty on the fiscal situation.

• It is worth remembering that the last five years of the National Democratic Alliance (NDA) government has seen a real decline in investment in agriculture despite these lofty announcements leading to a severe agrarian crisis.

The reforms areas announced by the finance minister:

• As the FM pointed out, out of 11 announcements, 3 were only about reforms.

• Among these, APMC reforms, online trading (e-NAM), and ‘One Nation One Market’ have been talked about for more than a decade.

• The reality is that most of them have failed to take off due to a lack of investment and consensus on what constitutes reforms.

• The agenda of raising agricultural exports to ₹1 trillion has to be seen in the context of a secular decline in agricultural exports during the last five years of this government’s policies.

• Most of these reforms are about marketing, storage, and access to credit to farmers and farmers’ organizations.

• The cluster-based approach and formalization of micro food enterprises are more than five years old and have already been initiated in Jammu and Kashmir and many other states but have failed to take off in the absence of adequate investment.

• While lack of investment has been a large stumbling block, the fact that agriculture is a state subject and requires consultations and consensus with participating states means most of these reforms have failed to materialize or yield the desired results.

What is needed?

• A participatory approach to resolving these and this will take time to bring states on board but also large investments against the track record of declining real investments.

• The real issue is not whether these reforms are desirable or the nature of these reforms but the relevance of showcasing them as solutions to the current crisis.

• The same is true of the sectoral approach of providing small sums for bee-keeping, herbal cultivation, livestock, and fisheries. Although relevant, none of these are going to help the affected households at this time.

• The issue is not providing choice to farmers to sell their produce but creating purchasing power among the consumers to buy agricultural produce.

• Once there is a demand for agricultural produce, the choice of markets is secondary and farmers have time and again shown their resilience by increasing production and making their products reach the farthest corners of the country including boosting exports.

Conclusion:

• Unlike the last two announcements where there was some financial commitment from the government, although negligible, this set of announcements did not have even that. Most of the financial commitments are for the future with no expiry date.

• Unfortunately, the crisis is not going to wait and the farmers are unlikely to weather through this storm of demand depression in the absence of fiscal expenditure and rising demand.

• Slogans, acronyms, and vision statements, however profound, are unlikely to be of any help unless the government decides to put its money where its mouth is. And these need to be put on the table now and not in some distant future.

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Prelims Questions:

Q.1) With reference to the Super Flower Moon, consider the following statements:

1. The Flower Moon is traditionally the fifth Full Moon of the year and is sometimes known as the Corn Planting Moon or the Hare Moon.

2. The full moon in the month of May is being called a ‘Super Flower Moon’.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: C

Mains Questions:

Q.1) What are the key reforms areas are announced by the finance minister on agriculture and allied sector? What are the steps needed to be taken to ensure the initiatives to become effective?

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