The importance of cultivating reform–the economic times

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Quick takes, analyses and macro-level views on all contemporary economic, financial and political events.

Prime Minister Narendra Modi was spot on when he said that the Rs 65,000-70,000 crore India spends on edible oil imports is money that could go to the country’s farmers. He also urged the states to encourage crops that suit their agroclimatic conditions and to build the infrastructure farmers need. In fact, if the Centre had acted on these insights before amending the farm bills, a lot of the farmer angst could have been avoided, and reform of agriculture away from excess production of grain to crops in short supply, such as edible oil seeds and pulses, could be accomplished without friction. Reform of something as complex as agriculture, after all, is a process and not just a question of changing some rules and laws.

The PM did well, too, to emphasise the role of physical infrastructure in enhancing the farmers’ income. Farmers need roads to carry their produce to the market. Climate-controlled storage and refrigerated fleets of trucks and rail cars are essential for reducing the wastage/spoilage of fresh produce and achieving greater levels of farm exports. It is surprising, however, that the PM did not emphasise the importance of political courage in carrying out farm sector reform. A vibrant agro-processing industry not far removed from the site of production — just as Amul’s milk processing plants are available within a few hours’ distance from milk collection centres — is a key ingredient of doubling farmers’ incomes. Some rudimentary agro-processing has been commonplace since Neolithic times. However, modern agro-processing calls for a steady supply of stable power. Even after drawing power lines to rural areas, power during the daytime remains unpredictable. Ending the political culture of patronising power theft and free, unmetered connections is the cornerstone of the needed power reform. The lead for this must come from the top.

A stable foreign trade regime for farm produce, functional forward markets, and genuine and transparent risk-transfer mechanisms are also with the Centre. It must walk the talk on these fronts.

This piece appeared as an editorial opinion in the print edition of The Economic Times.


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