NITI Aayog's ideas on farm sector should get a chance

Commission has envisaged a long-term agenda; the ball is now govt's court

A task force on agriculture, set up by the National Institution for Transforming India Aayog or NITI Aayog, has suggested a number of measures intended to raise agricultural productivity and make farming lucrative. These include, among others, the careful use of genetic modification technology in pulses and oilseeds; ensuring remunerative returns on main crops without actually procuring them at the minimum support prices (MSP); and de-canalising urea imports with subsidy going directly to farmers. Besides, it has emphasised the need to liberalise the land-leasing market to allow tiny, non-viable landholders to exit farming and to let the others expand their operational holdings to a viable size. Equally significant is the panel's counsel to use the Essential Commodities Act (ECA) judiciously, so as not to deter investment in storage and stockholding necessary to maintain off-season supplies. The other proposals have targeted at income generation with minimal incremental costs include helping farmers to frequently upgrade their seeds; facilitating well-functioning contract farming; turning food processing into a major export industry; and revitalising agricultural research with greater private investment. Another significant step proposed by the panel is to encourage the collection of vegetables and fruit from villages - the way milk is gathered by cooperatives and dairy companies - to supply these directly to retailers in cities for the benefit of both producers and consumers.

Many of these suggestions have been talked about for quite some time. Hopefully, their endorsement by a committee of the NITI Aayog means they acquire a new sense of legitimacy that the government may find difficult to disregard. More importantly, the NITI Aayog's task force has provided out-of-the-box mechanisms for their implementation. A case in point is the suggestion to replace the procurement-based system of providing MSP to farmers. Followed since the early days of the green revolution, this has remained confined to a handful of crops in a few states. The panel has suggested its replacement with a "price deficiency payment" mechanism. This involves fixing floor prices for different crops, based on their average market prices in the previous three years, and compensating growers for any shortfall in realising these rates. The compensation amount would be transferred directly into the farmers' bank accounts. This system is expected to prevent accumulation of unwanted stocks with the government even while helping to spread price incentives to more crops and more areas. The government would be free to undertake need-based procurement of staple cereals at the MSP.

On land-leasing, the task force's report falls short of suggesting non-agricultural use of the leased-out land. However, NITI Aayog Vice-Chairman Arvind Panagariya has argued in favour of it in his recent blog post on the Aayog's website, saying that states wishing to bypass the hurdles created by the 2013 land acquisition law could do so by incorporating an enabling provision for land-use conversion in the land-leasing legislation. The land-owners would have the right to renegotiate the lease terms while renewing the lease agreement on the expiry of the existing ones. The NITI Aayog has thus envisaged a long-term agenda for farm sector reforms. The ball is now in the government's court.