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Gujarat, a marginal contributor to India’s overall annual rice production, tops the list of states having the least distorted rice markets, according to the first ever ranking of states on the basis of degree of market distortion for rice, done by the Commission for Agricultural Costs and Prices (CACP).
Interestingly, top rice producing states such as Chhattisgarh, Punjab, Haryana, Odisha, Andhra Pradesh, and Uttar Pradesh have the most distorted market for the same.
Chhattisgarh, which has emerged as one of the biggest producers of paddy in India, is ranked the lowest among the 18 states where rice is mainly grown during the kharif season. In 2011-12, Chhattisgarh produced almost six million tonnes of rice, out of the total annual production of 104 million tonnes.
“Interestingly, the eight states with most distorted markets with respect to paddy and rice procured about 62 per cent of total marketed surplus of rice in 2011-12. Thus, the magnitude of distortion in the rice and paddy markets is clearly evident,” said CACP in its report.
The ranking was part of its kharif price policy recommendations made by the Commission for 2013-14. The Cabinet on Thursday accepted the Commission’s recommendations to increase the minimum support price (MSP) of paddy by Rs 60 a quintal for 2013-14.
West Bengal, India’s biggest producer of rice, was placed in the middle and was ranked the ninth in the overall list. In 2011-12, Gujarat produced around two million tonnes of paddy.
According to the Commission, the degree of market distortion for rice has been calculated on the basis of taxes/levies on rice as a percentage of MSP, bonus on paddy announced by the state governments, rice procurement as a percentage share in rice production, stock limits of paddy and rice, levy rice (which is to be distributed through the public distribution system), and market reforms undertaken by the state government.
The Commission in its recommendations advised the state governments to get their markets right and bring back the focus on establishing a single barrier free market, with minimum controls.
“State governments need to facilitate setting up adequate infrastructure such as storage facilities by the private sector, milling capacities; they also need to be discouraged from embarking on a high procurement mission, as it discourages private sector participation. State should come only as a last resort where the markets fail, and not take over the functioning of markets as a first step,” said the Commission.
