Subsidies, both overt and covert, in the farm sector on both frontsoutput and inputshave skewed cropping patterns (wheat and rice surpluses) and farming processes (fertiliser use), as well as led to misappropriation of public services (water, electricity). Food subsidy alone accounts for 5% of all government expenditure and simply covers price support, distribution and storage of wheat and rice! Roughly 10% of bank credit is tied up in government borrowing for the storage. The trade-off; our subsidy bill far exceeds both public and private investment in agriculture. And the failure of the PDS has meant malnutrition for millions. Policies and performance in other crops are mixed. For pulses, an important protein source in Indian diet, theres been little success in boosting output. High protection levels in oilseeds have not delivered.
Indian agriculture remains shackled in pathetically low coverage of irrigation, outdated market restrictions and poor infrastructure, food processing and logistics support. As Mr Pawar points out, total harvesting losses are nearly 30% (Rs 55-65,000 crore)! Despite faster economic growth and a more diverse demand for food, farm output growth has been sluggish, driven mainly by monsoon vagaries. Given the highly protectionist global trade environment, domestic distortions must be corrected to bring in competitiveness in production and supply linkages. APMC reforms are just a beginning. For the rest, political consensus is a slow process; the government must redouble its efforts to arrive at an agreement on agriculture reform.