The Finance Minster has recognised that a major cause for food inflation has been due to supply side constraints, exacerbated by huge gaps in post harvest storage infrastructure for agricultural produce, especially for fruits and vegetables.

Responding to industry's fervent pleas all post-harvest infrastructure, including cold storages, have been granted “infrastructure status” by the Finance Minster.

Hitherto, only port-handling facilities of agri produce had been declared as “infrastructure”.

There is an estimated 32 million tonnes shortage in storage capacity, and even conservative estimates put the immediate investment requirement at Rs 10,000 crore.

The grant of infrastructure status to this sector will provide a major fillip for investment in this vital sector.

Farm infrastructure

The Finance Minister's announcement that modern storage infrastructure, such as silos would be eligible for “viability gap” funding is also a good initiative to encourage modern storage practices, as currently post-harvest losses are estimated at Rs 50,000 crore due to poor storage practices.

Along with this, the Finance Minister has also reduced customs duty to 2.5 per cent on the import of all cold storage equipment which is seen by the industry as a complete package of reliefs provided to this sector.

Cash transfers

The announcement to pilot test cash transfers in place of grant of subsidies for kerosene and fertiliser is another excellent initiative but it would have been even better had this initiative been extended to food subsidies as well, which currently do not reach the intended beneficiaries.

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