Tuesday, January 18, 2022
View PointWe need both MSP and PDS

We need both MSP and PDS

Published: 5th Feb 2021 2:15 am

There is no second opinion on the need for reforms in the agriculture sector, particularly on the marketing side. But the reforms need to be situation-specific and assimilate ground realities with the concurrence of stakeholders. They should not be based on theoretic imitation and a unilateral decision of the government. What is good in a developed country may not be good in a developing country. It also depends on many complex issues like agronomic practices, socioeconomic conditions and the layers of distribution of incomes, which are endemic to each country. The farm Acts do not seem to take many of these into serious consideration.

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India, just because it has the 5th largest economy, cannot presume to bring in reforms imitating other countries with such large economy. The per capita income (PCI) of those countries is many times more than India’s – which ranks 142 in PCI in the world (IMF). And more importantly, the income distribution among their people is more equitable as against the stark disparity in our country. India has some of the world’s richest as well as the poorest. These reforms presuppose more or less a perfect market, but such market conditions seldom exist, more so in India. So the adage ‘what’s good for the goose is good for the gander’ is not right here.

Agri Dependence

Fifty-seven per cent of India’s geographical area is under agriculture, the second highest in the world. India has 94% marginal, small, semi-medium and medium farmers with constant indebtedness. Yields per unit area of land are less in India. About 60% population depends on agriculture, directly or indirectly. About 25% people live below poverty line (BPL). We have a national food security Act, people are given foodgrains on subsidised rates by the government. This system has evolved over a period of time. 65% of the people, including above poverty line, avail rations from the public distribution system (PDS). There are regulated agriculture markets and the MSP programme to help the PDS.

These systems also have accumulated much inefficiency, corruption and wastage of resources over the years because of politics, inept administration and corrupt practices. They need to be overhauled and modernised. But we cannot afford to ignore or allow them to peter out on their own. They need to be there with structural and administrative changes to serve our economically heterogeneous groups of farmers and consumers. For, in our country, agriculture is still a vagary in the monsoon. A bad monsoon in a year can impact national income — production, prices and incomes of farmers can go haywire.


Food Security

Over the years, the PDS has become synonymous with ‘food security’ and also formed an important part of government’s policy for management of the food economy. Till 1992, it was a general entitlement scheme. In 1992, it changed to focus on the poor. In 1997, it was made for the distribution of foodgrains to targeted groups. In line with this, Parliament passed the National Food Security Act (NFSA) in 2013. The NFSA seeks to make the right to food a legal entitlement by providing subsidised foodgrains to almost two-thirds of the population.

Experts say when 67% population of the country falls under the PDS for foodgrains, stopping of MSP is not pragmatic. And if the government stops MSP, then PDS will also get abolished automatically. In India, there is also a need to create a buffer stock for unforeseen situations. Procurement (MSP) and distribution (PDS) of commodities and the management of buffer stock must be studied in detail to determine the actual benefits to farmers and other population.
There is a need to make suitable structural and administrative changes to rationalise it and help the people more efficiently. At the time of natural calamity, the government has to distribute ration to the poor as it happened during the current pandemic. And without procuring foodgrain at MSP and using PDS, such distribution by the government is not possible.

It’s Economical!

The government is reluctant to include the MSP and PDS in the Acts, claiming it will be very costly, about Rs 23 lakh crore per annum as of now. But experts say it is exaggerated and may not cost more than Rs 8 lakh crore per year if the system is rationalised with necessary corrective measures. Which is not uneconomical considering its need and benefits to a large section of people. Whatever it may be, the government needs to get down to brass tacks to understand the implications and come to an understanding as to how to rationalise it. It cannot simply brush it aside. And proffering temporary informal promises outside the Acts is not dependable.

Dr HS Sidhu, a retired economics professor from the Punjab Agriculture University, Ludhiana, said stopping MSP as well as the PDS is not in the overall interest of the country, especially the poor. “According to the NFSA, India needs to cover 67% of the population under the PDS, including 75% rural poor and 50% urban poor, which works out to around 67% and it is not possible without supplying foodgrain under the PDS,” he said.

There is also an argument in favour of direct cash transfer instead of MSP and PDS. But, as experts say, if we provide cash instead of ration, the beneficiaries may end up using this money on other needs and it will lead to malnutrition in the country manifold. Transferring of cash cannot always be on time, which has been evident in months of delay in transferring money under various social schemes. Such a delay would deprive the poor of food, which is a basic need for survival. It may also be insufficient because of the ever increasing market prices. Therefore, it is shortsighted for the government to gloss over such an important aspect of MSP and PDS nexus in the agriculture marketing reform.

The farm Acts certainly need redoing to make them comprehensive, meaningful and durable. There was a big scope for a better reform if the government had gone in for adequate deliberations and used the proper parliamentary procedure. After all, the agriculture reform is not as controversial or contentious like Article 370 or the CAA.

(The author is a freelance journalist)

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