MSP needed for crop diversification but States must also facilitate shift: Eco Survey

No mention of farm laws repeal, MSP committee in Eco Survey

January 31, 2022 08:19 pm | Updated 08:23 pm IST - NEW DELHI

Chief Economic Advisor, V. Anantha Nageswaran alongwith his team shows Economic Survey 2021-22, tabled in both the Houses of Parliament by Union Finance Minister Nirmala Sitharaman, in New Delhi, on Monday, Jan. 31, 2022.

Chief Economic Advisor, V. Anantha Nageswaran alongwith his team shows Economic Survey 2021-22, tabled in both the Houses of Parliament by Union Finance Minister Nirmala Sitharaman, in New Delhi, on Monday, Jan. 31, 2022.

There is an urgent need for crop diversification in view of the severe water stress in areas where paddy, wheat and sugarcane are grown as well as to increase oil seed production and reduce dependency on imports of cooking oil, the Department of Economic Affairs said in the annual Economic Survey released on Monday.

It said that while the Centre has adopted minimum support prices (MSP) for farm produce as a key tool to encourage crop diversification, the onus was on States to take coordinated action to facilitate a shift towards crops with higher value and lower water consumption. However, there was no mention of the MSP committee which the Prime Minister had promised to set up in November to draft policy on all these issues.

The Survey also completely ignored what was arguably the biggest development in agricultural policy over the last year — the repeal of three agrarian reform laws in the wake of widespread, year-long protests by farmers. The previous Survey had in fact included a five–page section on the reforms, arguing that the three laws were “a remedy, not a malady”.

On the eve of the Union Budget, the Survey urged an increase in funding for agricultural research rather than farm subsidies, noting that “every rupee spent on agricultural research and development yields better returns compared to returns on money spent on subsidies or other expenditures on inputs.”

The government noted that agriculture continued to be a major driver of the economy in the pandemic era, with the sector’s growth rate rising from 3.6% in 2020-21 to 3.9% in 2021-2022. The share of dairying, poultry, horticulture and fisheries in the farmers’ income continued to rise in comparison to traditional food grain production, especially due to the fragmentation of farm land holdings, the government said, emphasising on a shift in priorities towards these sectors.

Farm households have seen their net receipts from crop production drop from 48% of monthly income to 37% over the last seven years, said the Survey, citing data from the latest Situation Assessment Survey released in September. Overall, the monthly income of farm households stands at ₹10,218 in 2021 with livestock and wages contributing a higher share than in 2014.

Apart from such a diversification of income towards non-crop sources, the government also pushed for a diversification of crop types. It noted that areas growing paddy, wheat and sugarcane are seeing baseline water stress of over 80%, with the ground water extraction rate having crossed 100% in Haryana, Punjab, Rajasthan and Delhi, while Hiumachal Pradesh, Tamil Nadu and Uttar Pradesh have also seen dangerously high levels of ground water usage. The other concern is the failure of oilseed production to match consumption requirements, leading to a crippling import bill.

“Crop diversification towards oilseeds, pulses and horticulture needs to be given priority by addressing the core issues of irrigation, investment, credit and markets in their cultivation,” said the department. “While the government has adopted the use of MSP as signal to encourage crop diversification, there is also a need for coordinated action from the State governments to facilitate the shift to high value and less water consuming crops to enable realisation of the objective of doubling farmers’ income in a sustainable way,” it added.

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