‘Free grain scheme to create pressure’ – Times of India

Niti Aayog member Ramesh Chand says continuing the free grain programme under the Pradhan Mantri Garib Kalyan Ann Yojana beyond December will put a huge burden on government finances and also fuel price pressures. In an interview to TOI, Chand says tightening money supply can impact overall growth, including the farm sector. Excerpts:

When do you expect food prices to ease, particularly cereals and vegetables?
They have already started easing. Despite unseasonal rains towards October-end, inflation in vegetable and cereal prices has fallen. Most of the food inflation in the country is attributable to the international price situation of food and fertiliser. As long as international prices remain high, Indian prices will remain under pressure. The government is keeping a close eye on international prices and prompt actions like changes in tariff and export/import easing/tightening are taken to minimise impact of high volatility in international prices on domestic prices.
What is the long-term solution for high food prices?
We must distinguish between prices being high because of volatility and because of trend. Current phase of food prices represents volatility, which is a result of global supply disruption, high prices of energy transmitted through increase in prices of fertiliser, fuel and other inputs. Long-term solution to keep food prices at a reasonable level is to cut cost of production and raise yield through technology.
Should the government roll back Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY) scheme once extension is over?
Supply of wheat and rice under NFSA (National Food Security Act) at Rs 2 and Rs 3 per kg, supplemented by free supply of the same quantity (5kg/person/month) to close to two-thirds population of the country since April 2020 has served as a strong food safety net during Covid period. This has been extended till December 2022. Grains supplied through PDS under NFSA and PMGKAY meet about 80% of staple food requirements of close to 80 crore people in the country. As the economic activity and economy have returned to the normal level, there is a strong case to discontinue free supply of additional foodgrains to NFSA beneficiaries. Now, there is a more pressing need for curbing rising prices of cereals. Same quantity of food grains sold or left in the open market, instead of distribution under PMGKY, will have a much more sobering effect on food prices and inflation. Continuation of PMGKY was an extraordinary measure for an extraordinary time. Its continuation beyond December will put a huge fiscal burden on the exchequer, which fuels inflation and also lowers resources available for public expenditure on more important areas. It will also lower supply of wheat and rice below normal level in the open market, posing a serious inflation risk, besides reducing export of foodgrains.
Is monetary policy an answer to controlling food inflation?
I think in the present situation money supply is not a significant factor for food inflation. Tightening money supply can affect overall growth in the country, including that of the agriculture sector.
What steps are needed to raise productivity of the farm sector?
Technology is the prime mover for productivity and growth. Technology scene of agriculture is undergoing big change globally, especially in the developed countries. If we do not keep pace with that we will face the risk of losing our competitive edge and strength, as is already evident in the oilseed sector. We need to increase investments in frontier areas of agricultural sciences and facilitate lateral flow of technology from rest of the world to India. Genetic engineering and biotechnology are offering huge opportunities. We should not oppose such innovations on ideological ground. Niti Aayog has suggested a clear road map for GM crops in its reports, which is a good guide to move ahead with GM technology in agriculture. Taking technology from lab to field and supply of improved seed are other important sources of growth in productivity. Our public extension system is weakening. We need to deploy digital technology to disseminate knowledge to our farmers for improved practices.

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