| Agricultural policy in India: need for a fresh look (1992) |
It is an obvious fact that in many cases the present agricultural surpluses reflect inadequate purchasing power, or in economics terms, lack of effective demand in the country. The dilemma of surplus food-stuffs, on one hand, and millions of hungry poor people, on the other, has been sought to be tackled through subsidisation of staple foodgrains. However, all available evidence indicates that the beneficiaries of food subsidies have been mostly urban consumers and the rural poor people have hardly benefited.
Furthermore, food subsidies are becoming increasingly a big drain on the public exchequer and, therefore, there is a need to replace them by direct income transfers, preferably in the form of food coupons, to the poor. The other and more recent approach to the problem of surpluses is to export them. There is nothing necessarily wrong with this approach provided that most of the resultant benefits are widely distributed among the producers, and not cornered by a few middlemen. There is at present no evidence, with the possible exception of dairy commodities, that this is in fact happening. There is, therefore, a need to channelise exports of whatever agricultural commodities are genuinely surplus through producers’ co-operatives so that the benefits from exports go back to the producers. It is now a well-known fact that India has a comparative advantage in producing high value labour-intensive crops and commodities like vegetables,milk and milk products. In view of this, we suggest that such commodities after necessary processing and quality control should be exported through producers’ co-operatives. But such exports should not result in unnecessary hardships to poor consumers in the country.