NEW DELHI: The World Bank has recommended radical changes in the Indian agriculture which can damage the country’s food security system designed to protect the interest of farmers and the consumers.
The bank has suggested reduction in food buffer stock, curtailment of the role of the Food Corporation of India (FCI), desegregation of price support and crop procurement policies, a new crop price formula linked to international prices, disbanding of levy schemes for procurement of rice and sugar and liberalization of farm imports.
The banks recommendations are, however, being resisted by the Union government. Farm experts wonder how long will the government hold on against the bank in view of the balance of payment crisis and loans linked with structural reforms.
Its other major recommendations include discontinuation of government monopoly on cotton procurement and export and diversion of government investment on oilseeds to other crops on the ground that the country does not have any competitive edge in this area. The bank wants liberal import of oilseeds and edible oils by the country.
In a comprehensive memorandum to the government, the multilateral agency has also demanded increase in the prices of fertilizer, irrigation water and electricity and reforms to reduce the farm subsidies which are largely enjoyed by rich states and rich farmers. It has said that the 1992 Union budget should provide for the subsidy cuts.
It has also called for reforms in the farm credit system to prevent its collapse. It has, in fact, delayed negotiations for a loan for the National Bank for Agriculture and Rural Development (NABARD) to hasten the reforms which were originally proposed by government committees, including the agricultural credit reforms committee.
The Bank has also recommended action food subsidy through recast of public distribution system (PDS) with the focus on rural poor. It feels that PDS is bedeviled by leakages and FCI by high cost of operation. It says that FCI should concentrate in areas where price support operations can result in more production.
It has opined that the crop pricing system has resulted in high incentives for oilseed and sugarcane growers and low incentives for wheat, rice and cotton. The discriminatory mechanism should be replaced by a crop neutral pricing formula which should be linked to the global markets.
Apart from recommending liberalization of farm imports, the bank has called for removal of government-enforced restrictions in trading of plantation crops such as tea, coffee and rubber. It has also suggested gradual withdrawal of restrictions on export of certain crops such as cotton and rice.
It says that complicated regime of wade controls has contributed to declining farm exports, high protection to sugar and oilseed” farmers and limited attempts to: promote labor intensive, high value exports.
The bank has also demanded readjustment of sub-sect oral outlays within the agriculture and rural sector in the coming budget. It says that the 1992 budget should provide for higher allocation for agriculture, rural infrastructure, farm research and extension, forestry and other such areas where the government should target its _ investments.
It has also called for restructuring of fertilizer industry and disbanding of controls on marketing: and distribution of nutrients.
Article extracted from this publication >> December 6, 1991
