While agriculture year (July-June) 2016-17 saw record-high pulses production, profit margins for all pulses except gram (chick peas) declined by an average of 30%. This was despite the fact that there was a 12% increase in minimum support price of pulses.
Farm incomes remain stressed given the volatility in prices and declining realisation. A study by Crisil points out that inflation in pulses, as measured by the wholesale price index, follows a cyclical pattern, with prices shooting up every 2-3 years.
Rainfall plays a very important role in cultivation of pulses as 82% of the area under pulses is unirrigated. As most government irrigation projects since 2004 have been delayed or remain incomplete, the government should invest more in expanding water conserving techniques such as drip irrigation to reduce pulses farmers’ dependence on monsoon.
The Crisil study notes that procurement of pulses was sub-par, and with global prices being lower compared to domestic prices, the government imported over 6 million tonnes of pulses through the price stabilisation scheme. As a result, prices of pulses collapsed.
While the government has prohibited export of pulses, except for gram and organic pulses, flexibility in export policy can provide adequate cushion against supply shocks.