Economic Survey recommends huge investment in farm research, warehousing

Economic Survey recommends huge investment in farm research, warehousing
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Highlights

Economic Survey Recommends Huge Investment in Farm Research, Warehousing. To boost farm and food sector, the Economic Survey today prescribed huge investment in areas like research, irrigation and warehousing, besides calling for subsidy rationalisation and setting up of a national common market for agri-produce.

New Delhi: To boost farm and food sector, the Economic Survey today prescribed huge investment in areas like research, irrigation and warehousing, besides calling for subsidy rationalisation and setting up of a national common market for agri-produce.

The survey, which was laid in Parliament today, said the government's public expenditure should focus on higher investment to boost yields instead of providing subsidies.

Although there will not be significant rise in inflation due to weak global commodities prices, the survey said the weak trade prospects could affect farmers' incomes, leading to more "political pressure" to support farmers.

It also asked the government to relook at the role of the Indian Council of Agricultural Research (ICAR) and if there is a need for separating research, education, and extension.

"Agriculture and food sectors need huge investment in research, education, extension, irrigation, fertilisers, and laboratories to test soil, water, and commodities, and warehousing and cold storage," the Economic Survey for 2014-15 said.

Rationalisation of subsidies and better targeting of beneficiaries through "direct transfers" would generate part of the resources for the public investment, it said.

Pointing out that the public expenditure in agriculture is only one-fourth of expenditure towards food and fertiliser subsidies, the survey said: "Focus of public expenditure for agriculture so far has been on provision of subsidies and it is time it shifted towards investments to boost productivity."

According to the survey, higher investments are necessary as there are wide differences in yields between states. Even the best of states have much lower yield in different crops when compared to the best in the world.

This provides ample opportunity to increase production by bridging the yield gap, it added.

Noting that the government should make "every effort" to bring states on board for creating a national common market, the Survey also suggested the government should use Constitutional provisions if states do not support this move.

The survey also felt that the functioning of the Food Corporation of India needs to be revamped substantially and said that the recommendations of the Shanta Kumar Committee on FCI restructuring provide useful suggestions for the future road-map of food-policy.

For 2014-15, the government has estimated a positive growth rate of 1.1 percent for agriculture despite lower rainfall. Foodgrains output is estimated at Rs 257.07 million tonnes this year, down by 3 percent from last year. Stating that the current strategy of price-led growth in agriculture is unsustainable, the survey suggested the government to achieve growth in agriculture relying more on non-price factors like productivity.

"To improve resilience of the agricultural sector and bolster food security, including availability and affordable access our strategy for agriculture has to focus on improving yield and productivity," it said.

To boost crop yields, the Survey said that the existing regulatory framework for genetically modified GM crops require rethinking.

"Given the lack of evidence on negative consequences from Bt and other GM crops, and the significant potential productivity, food security, and sustainability benefits, the corresponding regulatory frameworks and their implementation deserve rethinking," it said.

Keeping in mind the country's import dependence on oils and pulses and susceptibility of potato to inflation, the Survey said that the government should take necessary steps to avoid shortages of certified seeds of these commodities.

On farm credit, the Survey said that the government need to address on a priority basis the inadequate targeting of beneficiaries and monitoring/supervision of the end-use of short term crop loans for which interest subvention scheme is applicable and decline in long-term/ investment credit to agriculture.

For providing efficient advance price discovery to farmers and enabling them to hedge price risk, the Survey said that the commodity markets regulator Forward Markets Commission (FMC) should be strengthened and empowered to regulate the market more effectively.

On farm trade policy, the Survey said that there is an increasing demand for opening up of the export of pulses which would incentivize farmers to invest in pulse cultivation and for a reasonable duty structure to be devised to contain excessive import.

"Further, a pre-announced import duty structure will bring stability in domestic edible oil prices leading to increase in production of oil seed/palm. This will also result in reduced incidence of prices falling below MSPs of oilseeds requiring procurements by government agencies," it added.

Stating that reforms are required in farm import policy, the Survey said the applied tariffs for imports should be linked in a counter-cyclical manner with international prices so that the landed prices of imported commodities fall within a known range.

"This would protect farmers from adverse impact of steep fall in commodity prices and facilitate long-term investment in agriculture," the Survey said and added that while the trade policy regime should be stable, it should also be nimble to quickly respond to the changed export duty structure of the porting countries. The survey also added that for development of a common national market for agricultural commodities through e-platforms, the governemnt has already approved Rs 200 crore for a central-sector scheme.

The scheme will promote national agricultural market through Agri-Tech Infrastructure Fund (ATIF) to be implemented during 2014-15 to 2016-17.

"Under the scheme, it is proposed to utilize the ATIF for migrating towards a national market through implementation of a common e-platform for agri-marketing across all states," the survey stated.

It also added that on the request of the Centre, number of state governments have exempted the marketing of fruits and vegetables from the purview of the APMC Act.

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