Tariff walls and silly lies don't make a robust farm policy

Tariff walls and silly lies don't make a robust farm policy

There are two ways in which Indian farmers can be helped to face growing competition from abroad. One, the government can put up tariff walls and two, it can give farmers what they need to improve productivity. The new agricultural policy document tabled in Parliament by Union Agriculture Minister Nitish Kumar comes just eights months before India has to remove quantitative restrictions on 715 products under its commitments to the WTO. The policy promises tariff protection in explicit terms but not enough on the second front. Lip service is paid, as it has been paid these last five decades, to tenancy reform, the redistribution of surplus land among the landless, updating land records, freeing cooperatives from the heavy hand of government and so on. Such measures need to be implemented to help improve the productivity of millions of small cultivators. But if there is any real intention on the part of those in power at the Centre and in the states to push these programmes through in this century, they havetaken care to hide it from view.

Immediate plans seem to focus narrowly on facilitating the emergence of private sector agribusiness corporations. The rest will carry on as before while incremental reforms in agricultural pricing and the tax structure are introduced. It is necessary to encourage the agribusiness sector which has enormous export potential but there are a lot of other areas that cry out for attention simultaneously. Agribusiness and small cultivators urgently need to see the upgradation of the rural infrastructure, better water management policies, improved market access and better access to credit and agricultural inputs. While the policy paper touches on these and an array of other issues from genetically modified foods to removing price distortions in the domestic market, there has been no attempt to lay down priorities or the sequence of deregulation and reform which will best boost agricultural growth to 4 per cent per annum.

There is no radical rethinking on the procurement price system even though the need for it is very evident in the current mess over wheat supplies. Having managed to procure twice as much wheat as was needed to replenish buffer stocks, the government has had to contemplate the prospect of rotting grain in godowns or selling in the open market at prices lower than its economic cost. The latter course would have meant giving private traders a handsome wheat subsidy at a time when the food subsidy to the poor had been drastically cut by raising PDS wheat and rice prices by over 60 per cent. As predicted, total foodgrain offtake from the Food Corporation of India has fallen by nearly 25 per cent since the food subsidy cuts in the last budget. That means higher carrying costs for the FCI and more foodgrain for rodents. But instead of getting out of its quandary by releasing foodgrain at affordable prices to the poor the government has gone ahead with selling wheat at low prices in the open market where the tradewill corner it. Meanwhile the people are being fed with an accountant's jugglery of the figures: a recalculation of the FCI's economic costs which really amounts to a silly deception.