FM rightly pointed out serious flaws in supply chain

Written by fe Bureau | Updated: Mar 1 2011, 09:21am hrs
The finance minister has rightly pointed out serious flaws in our supply chain, which originates from government-regulated mandis, preventing end-users and processors from integrating their enterprises with farmers. There is need for the state governments to review and enforce a reformed Agriculture Produce Marketing Act urgently. In fact, we have advocated this idea long back, since 2006, and has been successful in bringing down the price gap between farmers and consumers at those areas and in those commodities where it has commenced its operation.

The statement made by the finance minister about introduction of a Constitution Amendment Bill in this session of Parliament towards implementation of GST and establishment of a strong IT infrastructure to implement the GST regime are also significantly important announcements. Once GST is implemented, it will help us expand our operations across the country and to truly implement a pan India, common Indian market, where people can buy or sell commodities anywhere in the country, just by getting one GST number.

It is rightly pointed out that the recent spurt in food prices was driven by increase in the prices of items like fruits and vegetables, milk, meat, poultry and fish, which account for more than 70% of the WPI basket for primary food items. In order to augment Green Revolution in the eastern region, the government has continued last year's initiative with a further allocation of Rs 400 crore. The program would target the improvement in the rice-based cropping system of Assam, West Bengal, Orissa, Bihar, Jharkhand, eastern Uttar Pradesh and Chhattisgarh.

The credit flow to farmers has been raised and banks have been asked to step up direct lending for agriculture and credit to small and marginal farmers. Reduction in interest rate for crop loans, to 4% per annum, is also a significant step to boost farm credit through the institutional mechanism.

The process to create a new storage capacity of 150 lakh metric tonnes through private entrepreneurs and warehousing corporations has been put on a fast track. The decision to create 20 lakh metric tonnes of storage capacity under the Public Entrepreneurs Guarantee (PEG) Scheme through modern silos, has also been taken. It is estimated that around 2.6 lakh tonne of capacity will be created by March 2011 and further 40 lakh tonne by March 2012.

The announcement of viability gap funding to attract investment in this sector for creation of modern storage capacity will boost investment in warehousing infrastructure. The consideration of cold chains and post-harvest storage as an infrastructure sub-sector will have far-fetching impact on the warehousing sector.