The “perfect storm” kicked up by extreme weather events and lower crop price realisations — not to mention the political backlash resulting from its controversial land acquisition ordinance — has meant that the first year of the Modi sarkar has gone by without any major reforms in the farm sector.
The most significant miss has been on the subsidy front. There was a general expectation that a beginning would be made in rationalisation of fertiliser (especially urea) and PDS food prices, alongside a move to direct benefit transfers (DBT) in place of untargeted physical delivery at below-market rates. This was, in fact, recommended by a committee headed by former Union food minister Shanta Kumar, which submitted its report to the Prime Minister in January.
But forget DBT, no attempt has been made at even rationalisation of prices. The Central issue prices of rice and wheat sold through ration shops were last revised in July 2002. The maximum retail price (MRP) of urea has been raised only marginally since April 2010 from Rs 4,830 to Rs 5,360 a tonne. The fact that the prices of all other fertilisers have been decontrolled, while their MRPs have gone up three times or more during this period, has led to over-application of urea by farmers with adverse consequences for soil health and nutrient balance. No move has been initiated as yet for either decontrol of urea prices or even de-canalisation — i.e. allowing free imports by non-state trading enterprises, as in the case of all other fertilisers.
One area that has seen some reform, though, relates to minimum support prices (MSP) payable on official paddy and wheat purchases. For 2014-15, these were raised by a mere Rs 50 per quintal, compared to the average annual hike of Rs 76-77 per quintal during the UPA’s tenure from 2004-05 to 2013-14.
Moreover, there has been a crackdown on the practice of state governments offering bonuses of Rs 150 to Rs 300 per quintal, respectively, on wheat and paddy over and above the Centre’s corresponding MSPs of Rs 1,400 and Rs 1,310 per quintal for 2013-14.
If despite lower MSP increases and bonus withdrawals, government procurement has actually been higher so far during the current kharif and rabi marketing seasons — 26.58 million tonnes (MT) for wheat and 27.93 MT in rice, as against their corresponding last year’s procurement levels of 26.14 MT and 27.61 MT — it only indicates farmers’ reconciling themselves to supplying at rates more in alignment with market realities.