Daily Financial News Analysis – 26th Sep’20

Table of Contents

Pulse Security of India

Lessons from pandemic – be atmanirbhar
Particularly, in food – be atmanirbhar
Most of the countries which had food grains declared an export embargo.
India not only fed its citizens for free but also gave food in the form of humanitarian aid.
The government announced an extra 5-kg supply of grains (rice & wheat) per head per month free, for close to 81 crore beneficiaries covered under National Food Security Act (NFSA) and also made provisions of 1 kg of pulses to about 20 crore families (NFSA beneficiaries).
These allocations were in addition to the 5 kg of highly subsidised grain per head per month entitlement under NFSA.
2015-16 – India faced a situation of acute scarcity of pulses
This pulses crisis set forth an ambitious and desirable outcome to make the country self-sufficient in pulses production.
The government acted on supply, demand and regulatory fronts with equal emphasis.
Minimum support price – increased by 8-16%
Procurement from farmers directly at MSP
Additional coverage was provided for pulses under the National Food Security Mission (NFSM) launched in 2016-17
Increasing acreage productivity
Production of pulses through distribution of seed mini-kits
Subsidy on the production of quality seed
Creation of 150 seed hubs
Elaborate arrangements were made for procuring of pulses from farmers under the Price Support Scheme (PSS).
The government guarantee for procurement operation was increased manifold.
Foreseeing the need to have a strategic buffer of pulses, a 20-lakh-tonne buffer stock was formed through the Price Stabilisation Fund (PSF), with a corpus of more than Rs 10,000 crore.
The state governments, particularly of pulse-production leaders like Madhya Pradesh, Rajasthan, Maharashtra, and Karnataka, worked in close coordination for the procurement of pulses.
Farmers were greatly enthused by the attractive MSP.
There was a 42% increase in production of pulses.
National Agricultural Cooperative Marketing Federation Of India Ltd (NAFED) played a pivotal role in procurement under PSS and PSF, by procuring 8.7 lakh tonnes in 2016-17.
This was equivalent to the procurement made in the last 15 years put together!
The government continued its focus on pulses production in 2017-18.
The MSP for pulses saw an increase of 7-10%.
To provide impetus to domestic production, import of pulses was suitably calibrated from time to time.
Import policy and customs duty was tuned to give priority to Indian farmers.
The favourable monsoon and the continued enthusiasm in farmers to make India self-sufficient in pulses resulted in the highest ever production of pulses in the country, at 254 lakh tonnes, in 2017-18.
Procurement of pulses from farmers was more than doubled, by about 20 lakh tonnes.
During 2018-19, total procurement of pulses was more than twice that of the previous year, at about 42 lakh tonnes.
Even in the lockdown period, the government continued to support farmers by implementing the MSP and procuring about 23 lakh tonnes of pulses and 8.2 lakh tonnes of oilseeds at MSP.
While announcing the MSP for kharif 2018, a longstanding demand was fulfilled with the promise to provide MSP equal to 1.5 times the production cost.
The MSP of moong was increased by 25%, and the result was an increase in production by 22%.
Similarly, in the case of grams, the increase in production has been in line with the MSP increase.
Farmers’ responding to MSP increase by producing more rice and wheat is a well-documented story.
MSP increase is a strong signal to the farmer that market prices are going to increase, and hence, a decisive factor in determining which crop to grow depending on the soil type and other environmental factors.
This direct and strong correlation between MSP and production holds good for pulses also.
The regions where pulses are grown are rainfed areas.
If not pulses, cotton or soybean may be grown in these areas.
Increasing the MSP of pulses, coupled with robust procurement operations under PSS or PSF, have given the farmers a much-needed breather in uncertain agri-climatic conditions.
The otherwise fallow land is now being used for sowing two pulse crops (kharif and rabi) in most of the regions.
Better utilisation of land resource and the increased income from two crops coupled with soil productivity increase and fodder for animals has found resonance with farmers.
MSP is more than a catalyst to achieve higher output, which would make the country self-sufficient in pulses—starting with rice, wheat, milk, cotton, sugar, vegetables, fruits, fish, etc.