Tuesday, Sep 23, 2014

Govt hikes MSP,ignores CACP’s reform measures

Written by Ravish Tiwari | New Delhi | Posted: June 28, 2013 2:48 am

The Cabinet Committee on Economic Affairs Thursday approved the hike in minimum support price for kharif crops but sidestepped radical non-price suggestions that were made to correct the imbalances in agriculture markets.

The recommendations made by the Commission for Agricultural Costs and Prices was learnt to have been part of the CCEA note moved by the agriculture ministry. It included suggestions to liquidation of at least 15 million tonnes of food grain stock with the government,decontrol fertiliser sector and fully open agricultural exports.

There were also suggestions to integrate MGNREGA with agriculture to subsidise labour cost,liberalise “restrictive laws” on agriculture markets and adopt direct cash transfer of food subsidies in 33 cities and cereal surplus states.

“No” was stock reply of a Cabinet source on a query whether the CCEA discussed these suggestions. The CACP suggestions are pertinent as it is body entrusted by government to recommend MSP for agricultural mainly to incentivise farmers and ensure food security.

The agriculture ministry had accepted most of CACP suggestions except in case of crops like Bajra and Arhar. The ministry proposed higher prices than recommended.

Making a pitch for liquidating 15 million tonnes of existing stock,the CACP had said,“The Centre need to review its open-ended procurement policy and decide not to accept more than say 75 per cent of last year’s procurement from states that impose taxes and levies beyond five per cent of MSP or give special bonus on top of it. This is necessary to rationalise pricing,contain the food subsidy bill and get the markets right.” The suggestion however would put a check on key wheat procurring states like Punjab and Madhya Pradesh.

Despite UPA government’s affection towards MGNREGA and proposed food bill,the CACP had suggested integration of the scheme with agriculture to subsidise agriculture labour by half. It had claimed that the scheme has led to labour shortage.

The political leadership had also made it clear that it was against cash transfer of food subsidies. But the CACP advised government to integrate the National Food Security Bill with cash transfer plan. It argued that it will “allow the food grain market to function effectively” as the Bill in current form threatens to “crowd out private sector operations” in domestic market.

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