Farmers Up The Garden Path

Context: Various policy gaps have hindered the growth of the rural economy and the alleviation of poverty.

Policy Gaps and Impact on Rural Economy

• Benefits are subdued by the taxation policies/regime
• Landowning farmer under PM KISAN receives Rs 6,000 annually as benefit but have to incur tax on diesel (Rs 45 per litre of diesel).
• Under the single tax, regime farmers are paying Goods and Services Tax on purchase of inputs like seeds and fertilizers without claiming input credit, unlike industry.
• Despite lower price of crude, higher gas cylinder prices
• UJWALA-scheme-subsidised gas cylinder is available to the underprivileged at higher prices (at Rs 611 as against Rs 503 pre-COVID). 
• Ignoring The Commission for Agricultural Costs & Prices recommendation:
• Minuscule increase in Minimum Support Price (2.9 %), despite the CACP report, which recommends a higher increase of 5.1% indicating a higher cost of cultivation.
• The MSP has changed from being the minimum support price to becoming the maximum selling price. 
• Counterproductive policy interference by other ministries: impacting the farmgate prices. 
• If a consumer can afford to eat a more expensive dal or a more expensive non-essential produce (say, onions), then they don’t need to be subsidized by subduing farmgate prices.
• For, E.g. 75% of the dal consumed in India is chana and arhar. While both are selling below MSP, import duties on masoor dal were reduced by two-thirds to 10% because there was a demand for it in one part of India.

Conclusion: Issues of governance and implementation in rural economic policy need to be addressed at priority basis.