Jul. 19, 2019
Maharashtra chief minister Devendra Fadnavis (centre) chairs the first meeting of the committee of chief ministers
set up to suggest reforms for the farm sector, in New Delhi on Thursday.
> The Fadnavis-led panel calls for a close coordination between Centre and states to resolve farm distress
> The panel, led by Maharashtra’s Devendra Fadnavis, was set up at the instance of Prime Minister Narendra Modi to provide solutions for rural distress
A panel of chief ministers is considering a proposal to link major Central government fund transfers with the pace of agriculture market reforms by each state.
The panel, led by Maharashtra’s Devendra Fadnavis, was set up at the instance of Prime Minister Narendra Modi to provide solutions for rural distress and suggest reforms for the farm sector.
One key proposal discussed at the meeting on Thursday was to exclude farm produce from the purview of the Essential Commodities Act that regulates production, supply and trade of certain commodities.
After the meeting, Fadnavis said close coordination among different Central ministries, as well as state governments, was essential to bring in reforms in the fractured agriculture market in India. State governments are free to form their own policies in agriculture, as it is a state subject under the Constitution.
“Transfer of Central government funds to states, including Finance Commission grants, could be linked to agriculture reforms. Reforms are in the hands of states. Only if we have states on board, and all of them reform the sector together, can we see a big change in the country," Fadnavis added. The Central government now transfers 42% of its tax revenue to states every year as per the Fourteenth Finance Commission’s recommendations.
Getting all states to act together on contentious policy matters is a big challenge for the Union government after the erstwhile Planning Commission, which had a say in Central fund allocations to states, was replaced with NITI Aayog, which has no such powers. This has led to a situation where the policy think tank can only advocate ideas and policy changes without any fiscal leverage on states. NITI Aayog is the apex platform where the Prime Minister, Union ministers and state chief ministers interact on policy matters.
For Modi, addressing rural distress, amid low farm wages and less remunerative prices, is a priority. Soon after returning to office for his second term, the Union cabinet decided to expand the coverage of the Pradhan Mantri Kisan Samman Nidhi—an income support scheme for farmers announced before the elections—to include all 145 million farmers across the country. Earlier, it was limited to small and marginal farmers with less than five acres of land holding. What could add to the woes of farmers is the deficient monsoon rains in south India, which has pushed several states into drought-like conditions.
Fadnavis said reforms in the sector should focus on enabling farmers to access capital and agriculture markets. Infusing competition in the market, attracting investments into farming and enabling farmers to access modern farming technology will also be discussed by the chief ministers, before framing their recommendations.
The committee will also try to find ways of forecasting global demand for various commodities, tariff barriers in other markets and domestic demand of various farm produce to identify crops that will fetch better price for farmers. Fadnavis also highlighted the need for dynamic market forecasting.
States have to give their views by 7 August and the panel will meet again on 16 August to brainstorm further.