IASbhai Daily Editorial Hunt | 31st Dec

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Dear Aspirants
IASbhai Editorial Hunt is an initiative to dilute major Editorials of leading Newspapers in India which are most relevant to UPSC preparation –‘THE HINDU, LIVEMINT , INDIAN EXPRESS’ and help millions of readers who find difficulty in answer writing and making notes everyday. Here we choose two editorials on daily basis and analyse them with respect to UPSC MAINS 2020-21.

EDITORIAL HUNT #292 :“Indian Agriculture and Subsidies | UPSC

 Indian Agriculture and Subsidies | UPSC

Biswajit Dhar
Indian Agriculture and Subsidies | UPSC

Biswajit Dhar is Professor, Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi.

      HEADLINES:

Separating the wheat from the agri-policy chaff

      CENTRAL THEME:

In the farm laws debate, the focus should be on the exchequer-farm subsidies issue and the spending on farm subsidies

SYLLABUS COVERED: GS 3 : Agriculture

      MAINS QUESTION:

How large is India’s spending on farm subsidies as compared to those of other countries having substantial interests in agriculture?Substantiate -(GS 3)

      LEARNING: 

  • Comparison from West to East
  • Adverse terms of trade
  • A look at yields
  • Issues related to Farm Subsidies

      INTRODUCTION: 

In the on-going debates around the three new pieces of agricultural legislation have often been raised whether the state should be using the taxpayers’ money to provide subsidies to the farming community in this country.

  • A LOGICAL QUERY : Why have successive rulers used the exchequer to provide farm subsidies.

Indian Agriculture and Subsidies | UPSC

SOURCES : THE HINDU | Indian Agriculture and Subsidies | UPSC

      BODY: 

ADVERSE TERMS OF TRADE

  • WORKFORCE INVOLVED : It should be obvious to any keen observer of the Indian economy that the country’s agriculture, which also supports the remaining rural workforce, was, forever, living beyond its means.
  • AGRICULTURAL SHARE 1950 : In 1950-51, agriculture’s share in the country’s GDP was 45%, the share of the workforce dependent on the sector was close to 70%.
  • AGRICULTURAL SHARE 2020 : Seven decades later, agriculture’s share in GDP is below 16%, but almost 50% of the country’s workforce depends on this sector.
  • POTENTIAL COMPETITORS : The squeeze on the agricultural sector becomes even more evident from its terms of trade vis-à-vis the non-agricultural sectors.
  • THE UPS AND DOWNS : Agriculture has been facing adverse terms of trade over extended periods since the 1980s.

EXAMPLE
In the 1990s and again since 2012-13, there was no distinct upward trend.

  • TERM OF CONTRACTS : Since the middle of the 2000s, farming communities have almost consistently faced adverse terms of trade vis-à-vis non-farmers.
  • EROSION OF FARM INCOMES : Less income was triggered by growing inefficiencies, which, in turn, was caused by a lack of meaningful investment in agriculture.

The share of this sector in the total investment undertaken in the country consistently fell from about 18% in the 1950s to just above 11% in the 1980s 

  • SHEER NEGLIGENCE : In the subsequent decades, the situation has got far worse with agriculture’s share not even reaching double digits.

A LOOK AT YIELDS

  • NET YEILDS : A quick comparison of the yields of the major crops in India with those of other countries confirms the dismal state of agriculture in this country.
  • MAJOR CROPS AND WORLDWIDE COMPARISON : If one ranks countries in terms of their yields in wheat and rice — India’s two major crops — the country’s ranks were 45 and 59, respectively, in 2019.
  • BATTLE FOR SURVIVAL : The above ranking would go down sharply if the areas recording high yields, such as Punjab and Haryana, are excluded.

The market has always been the farmers’ biggest adversary, making it impossible for them to realise remunerative prices for their produce

  • MIDDLE MEN AND APMC : The existing marketing system dominated by the Agricultural Produce Market Committees has long been proved to be against the interests of the small farmers.

NEED FOR A POLICY

  • A COMPREHENSIVE DECISION MAKING BODY : Country needs an agricultural policy that addresses the challenges facing this sector in a comprehensive manner.
  • POLICY MAKING : The lack of a coherent policy for agriculture must surely be regarded among the most remarkable failures of the governments in post-Independence India.

The magnitude of this failure can be better understood if one considers the fact that the United States, with less than 2% of its workforce engaged in agriculture
 

  • FARMERS IN U.S. : U.S. has been enacting farm legislations every four years since the Agricultural Adjustment Act was enacted in 1933, the first piece of legislation of U.S. President Franklin Roosevelt’s New Deal.
  • FARMERS IN EUROPE : In a similar vein, members of the European Common Market adopted their Common Agricultural Policy in 1962, only a few years after establishing the institution.

ISSUE OF FARM SUBSIDIES

  • SUBSIDY IS A COMPENSATION : The state’s dole out is a price that the country pays for the failure of the policy makers to comprehensively address the problems of the farm sector.
  • IDEA OF SUBSIDY : Instead of a comprehensive set of policies, successive governments have chosen to dole out subsidies in order to ensure domestic food security and protecting rural livelihoods.

It must be said that the rulers have continued granting subsidies as a failure to realise that either of the two objectives can have catastrophic consequences for the country 

  • DISTORTED PRODUCTION : At the same time, wanton distribution of subsidies without a proper policy framework has distorted the structure of production and, consequently, undesirable outcomes in terms of excessive food stockpiling.
  • SURVIVAL KIT : When subsidies have virtually been made the survival kit for Indian farmers, there is possibly a need to understand the magnitude of the government dole out, also by comparing it with those granted by other countries.

      IASbhai Windup: 

ECONOMICALLY WEAK FARMERS

  • LATEST SUBSIDY : India’s latest notification, for 2018-19, shows that the subsidies provided were slightly more than $56 billion.
  • BENEFICIARIES : In most of the recent years, the largest component of India’s subsidies ($24.2 billion, or 43% of the total) are provided to “low income or resource poor farmers”.

However, designation of this category of farmers is left to individual members.India has notified that 99.43% of its farmers are low income or resource poor

  • AGRICULTURAL CENSUS : According to the agricultural census conducted in 2015-16, these are the farmers whose holdings are 10 hectares or less.

SUBSIDIES ELSEWHERE

  • The two major providers of farm subsidies, namely, the U.S. and the members of the European Union (EU) gave much larger magnitudes of support than India did.
  • America provided $131 billion in 2017 and the EU, nearly €80 billion (or $93 billion) in 2017-18.
  • Thus, for 2017, India’s farm subsidies were 12.4% of agricultural value addition, while for the U.S. and the EU, the figures were 90.8% and 45.3%, respectively.
ALSO READ : FARMER’S BILL 
       SOURCES:   THE HINDU EDITORIAL HUNT | Indian Agriculture and Subsidies | UPSC

 

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