Cong manifesto has some design issues

Sukhpal Singh | Updated on: Apr 11, 2019

Under stress: A file picture of an APMC yard in Mysuru. Scrapping the APMC Act is an ill-advised move | Photo Credit: M_A_SRIRAM ;M_A_SRIRAM -

In reaching out to the poor through NYAY and in its farm proposals, positive intent is not backed by right policy promises

One of the most talked about manifestos has been the one by Indian National Congress (INC) due to its promise of Nyuntam Aay Yojana (NYAY or minimum income scheme). The manifesto states that the decisive and focused intervention has the capacity to eliminate poverty within a decade i.e. by 2030.

It claims that during its 10-year regime, the UPA moved 14 crore people out of poverty.

The NYAY is targeted at the bottom 5 crore families (BPL households) constituting 20 per cent of all households who would be guaranteed a cash transfer of ₹72,000 per annum per family, in most cases in the bank account of a female adult member. The plan will be designed over three months followed by a pilot and testing phase of six to nine months before being rolled out in phases. It is estimated to cost less than 1 per cent of GDP in the first year and less than 2 per cent in the second year and the years after that.

The entire plan would be overseen in its design, testing, roll out and implementation by an independent panel of eminent economists, social scientists and statisticians. It is proposed to be implemented jointly by the Centre and the State governments. The funding of the scheme would come from new revenues and rationalisation of expenditure, including non-merit subsidies.

The major question this scheme gives rise to, is: if, in the next few years, poverty is likely to decline in terms of proportion of families under BPL as claimed in its (UPA’s) performance record for the previous terms, then why should each family get it for five years?

The other related issue is: if this scheme is intended to move BPL households out of poverty, then why target to enhance MGNREGS employment to 150 days which, anyway, is unlikely to be achieved going by the previous experience of more than 10 years where the average number of employment days generated under the scheme has been only around 50 days unless there is specific targeting of areas/districts for MGNREGS in some States.

The third issue which remains is that the assumed participation of the States may not happen as expected, which is unlike the PM Kisan scheme wherein the entire scheme is implemented by the Union Government.

But, PM- Kisan targets only land owning marginal and small farmers (not even all rural poor) and therefore, is limited in its coverage and is estimated to cost only 0.4 per cent of GDP compared with NYAY which could cost 2 per cent of GDP and 14 per cent of current annual tax revenue due to its large coverage of poor households (both urban and rural) and higher amounts paid per family (₹6,000 per month compared with ₹6,000 per year under PM-Kisan).

Incidentally, MGNREGS costs only 2.2 per cent of current tax revenue and all subsidies together 12 per cent of annual tax revenue. Both, PM-Kisan and NYAY move toward direct cash transfers instead of product or service subsidies. It is debatable whether Indian poor, especially small farmers, need and should be given only cash. Should they not have access to adequate and quality services/products if these subsidies are merit subsidies? This issue crops up with respect to the defence of PM-Kisan; when the issue of its exclusion of landless is raised, it is said that for them MGNREGS can be strengthened (as if it is leakage free).

APMC reforms

The Congress’ proposal to repeal the APMC Act and make trade in agricultural produce including export and inter-State trade free from all restrictions is an ill-thought proposal.

First, it is important to realise that agri market reforms are not just about repealing the APMC Act as seen in the case of Bihar which did the same in 2006. Today, there is a free-for-all in agricultural markets in that State and farmers are being charged commission for the sale of their produce which was not the practice in regulated APMC markets generally, as the buyer would pay the commission.

Therefore, instead of proposing repealing the APMC Act, there should have been some innovative thinking on bringing new channels for farmer produce like contract farming, direct purchase, private wholesale markets and the like.

Further, the repealing of the Act also suggests as if there is no need for regulation of the markets. Have Indian farmers become so capable that their interest in the market need not be protected at all by any regulation?

Already, the union model Acts on APLM (2017) and Contract Farming (2018) are moving towards facilitation and promotion of these mechanisms rather than regulation.

Even so, it is important to realise that agriculture and agricultural markets are State subjects and the Union Government can’t enforce any policy or regulation.

Earlier, the undesirable and illogical idea of delisting fruit and vegetable produce from agricultural markets (APMCs) came from the UPA/Congress party and was picked up and pushed by the present NDA government without considering its merits and demerits.

This delisting has not led to any benefits and has only reduced the revenue of the APMCs and the mandi Boards due to no market fee being charged on denotified produce.

Push new marketing channels

Rather, exemption from APMC regulation should have been used as an incentive to push the new marketing channels like contract farming and direct purchase.

Most of the other proposals like promotion of FPOs and PCs, focus on food processing and cold storage and warehousing, encouragement to organic farming and rejuvenation of extension system are routine; many of these policies are already in place at present and they sound more like annual budget proposals.

Surprisingly, the manifesto even talks of launching a national project to double the value of dairy and poultry production in five years, and not the income of its producers. Are there any lessons from the doubling of farmer income project of the NDA?

Similarly, restructuring of the CACP and setting up of some new commissions are steps the effect of which can’t be seen in the short term. The proposals to establish colleges of agriculture and of veterinary sciences at district level are unnecessary, unviable, costly, and more about creating infrastructure which may not have quality.

In sum, the manifesto is lofty on promises with good intentions, but short on innovations and deliverables, except the NYAY to some extent.

The writer teaches at IIM Ahmedabad

Published on April 11, 2019
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