Instead of providing subsidy through free electricity and cheap fertiliser, an international food policy research institute has advocated gradual withdrawal of the subsidy regime by providing short-term compensation to farmers and investing the subsidy amount directly for increasing farm yield.
A senior official with Washington-based International Food Policy Research Institute (IFPRI) told FE that the agriculture growth could be achieved by gradually removing farm subsidy. ?The government must cut down on subsidy in agriculture such as electricity and fertiliser and compensate farmers in short run after withdrawing the subsidy so that they do not get hurt due to change in the policy regime,? Mark Rosegrant, director, environment and production technology division, IFPRI, told FE. He also suggested that the government must invest the financial resources saved because of subsidy cut into the agriculture sector so that it becomes viable.
?Money saved from agricultural subsidy must be reinvested in the increasing productivity and increase farm income,? Rosegrant said.
The Indian government recently announced that it would provide this fiscal about Rs 28,500 crore as subsidy to decontrolled fertilisers under the nutrient-based subsidy policy that came into effect from beginning of this fiscal.
Under the new nutrient-based subsidy policy (NPS), the government provides subsidy on decontrolled (whose minimum support price is not decided by the government) nutrients such as phosphorus and potash.
About Rs 28,500 crore has been allocated for decontrolled fertilisers under the NBS, the minister of state for chemicals and fertilisers, Srikant Kumar Jena, had said in parliament.
The IFPRI official also recommended better use of food for work or Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) programme so that food security could be dealt with.
On seed development through private participation, Rosegrant, who is an expert on climate change issue and its impact on agriculture, said there should be mechanism in the place for ensuring that farmers get access to best of varieties of seed at reasonable prices. Besides the importance of integrated pest management system and water management is also key agricultural growth.