Sops, reforms for farmers in third tranche of govt aid

AATMANIRBHAR PLAN Farmers to get rights to sell freely, govt to overhaul agri markets

NEW DELHI: Finance minister Nirmala Sitharaman on Friday announced a mix of financial, legislative and reform measures aimed largely at increasing the pricing power of farmers – or share of profits in farm incomes – by proposing to dismantle historical domestic trade barriers, bring new laws for freer food and commodities markets, and better infrastructure.

Sitharaman’s third tranche of measures, aggregating ~1.63 lakh crore and part of a larger ~20-lakh crore stimulus, did not contain any direct cash transfer programme for farmers, or money in hand, but is a mix of new allocations and top-up to existing agriculturally critical schemes, some them announced in Budget 2020-21 in February.

It is also an attempt to push through critical legislative reforms that can free up India’s agricultural markets and improve farm incomes. Farming, the largest source of livelihoods, supports nearly half of all Indians and it has been hobbled by myriad archaic regulations.

According to estimates by economists and securities research firms, the measures announced thus far add up to around ~18.3 lakh crore (including around ~5.7 lakh crore of monetary measures taken in March by the central bank, and the ~1.7 lakh crore welfare package announced in late March ).

Finance ministry officials said there will be two more tranches -one to be announced on Saturday and the other on Sunday.

DK Srivastava, chief policy advisor at consultancy firm EY

India, said, “One salient feature of this tranche is that the direct fiscal cost (or cash spending) accounts for nearly 30% of the estimated benefit, which is much higher than in earlier two tranches.” His reference is to the fact the fiscal cost of the previous tranches is estimated by economists at a fraction of the overall number – a Credit Suisse report put the fiscal cost of the ~1.7 lakh crore welfare package, the ~5.7 lakh crore monetary measures, and the first tranche of ~5.94 lakh crore announced on Wednesday at around ~55,000 crore.

On Friday, the finance minister announced ~1 lakh crore to fund new farm-gate infrastructure, or simply agricultural produce markets, harvest management facilities, and a law to permit farmers to freely sell their produce to any trader of their choice, potentially ending persistent trade barriers in food trade that have been characterised by so-called agricultural market produce committees. Sitharaman said a mechanism would be fixed to assure profitable prices for farmers, which means at least a baseline profitable price signal available at the “time of sowing”. This is referred to as price discovery, whereby farmers will be able to estimate crop prices before taking sowing decisions so that they are able to grow commodities with demand.

NEWDELHI:The Congress on Friday demanded an apology from Prime Minister Narendra Modi and Union finance minister Nirmala Sitharaman for being “insensitive” towards farmers and neglecting them in the Covid-19 economic package.

The party said the “so-called ~20-lakh crore package” for offsetting the economic fallout of the pandemic has proved to be a “jumla package” and reflects the “voodoo economics” being followed by the two. It said the government has not put a single penny in the pockets of farmers through the package and claimed that farmers have lost over ~50,000 crore this rabi season.

“The package has only 13 zeros for farmers. The finance minister is repackaging the budget and should apologise to the farmers as no direct benefit is being given to them. There is only headline and no helpline,” the party said.

Former Union finance minister P Chidambaram said while the fiscal stimulus as part of the second tranche of announcements was ~5,000 crore, it was close to zero in the third.

“...the fiscal stimulus part of the 2nd tranche of announcements was ~5,000 crore. Most analysts agree,” he tweeted. “In today’s tranche it is close to zero. Even the FM declined to answer how many of the amounts mentioned today were already part of the Expenditure Budget and how many are additional...,” Chidambaram said in another tweet.

The ruling Bharatiya Janata Party (BJP) said the Congress wants to give a spin the total package of ~20 lakh crore by saying stimulus is fiscal spending alone.

“...stimulus refers to the use of monetary or fiscal policy to stimulate the economy. A stimulus can also refer to monetary policies like lowering interest rates and quantitative easing, etc. Together the total assistance given... will surely benefit the Indian economy,” Gopal Agarwal,

› a BJP spokesman, said. The package has only 13 zeros for farmers. The finance minister is repackaging the budget and should apologise to the farmers as no direct benefit is being given. There is only headline ... CONGRESS