NEW DELHI: Farm distress is a reality but it can’t be addressed by merely increasing the minimum support price (MSP) for crops, according to the Niti Aayog.
A better way would be to auction the farm produce at mandis using a minimum reserve price (MRP), says the think tank’s strategy document titled ‘New India@75’.
The document argues the MRP can be the starting point for auctions at mandis and it will fetch better price for the farmer. The think-tank has also suggested replacing the Commission for Agricultural Costs & Prices (CACP), which was recommending MSPs, with an agriculture tribunal.
The report comes at a time when agrarian distress has become a politically potent issue with state governments vying with each other to write off agriculture loans, ignoring the fiscal implications.
On Wednesday, Rajasthan became the latest state to waive farm loans. The scheme, which offers to write off up to 2 lakh, will set the exchequer back by 18,000 crore.
Early this month, a farmer in Nashik had to sell his produce of 750 kg of onion for a paltry sum of 1,064. The farmer sent the entire amount to the Prime Minister as a mark of protest. The Niti Aayog strategy paper, released here on Wednesday by Finance Minister Arun Jaitley, calls for annual nine per cent GDP growth to create sufficient jobs and achieve prosperity for all.
Finance Minister Arun Jaitley sought to distinguish between ‘slogans’ and sound policies. In a veiled reference to the Congress president Rahul Gandhi’s stress on farm loan waiver and unemployment, Jaitely said slogans are soon found out, while sound economic policies deliver in the long run. The document mooted various measures to create jobs and pep up the economy.
“Four key steps -- Increase the investment rate as measured by gross fixed capital formation (GFCF) from present 29 per cent to 36 per cent of GDP by 2022; About half of this increase must come from public investment which is slated to increase from 4 per cent to 7 per cent of GDP; government savings have to move into positive territory, requiring significantly higher resource mobilization efforts - will help achieve 9 per cent GDP growth,” the document said.