What we need is a marketing revolution so that we can get rid of the MSP.
So, while some Indian ports have facilities for unloading imported foodgrain, none have a facility for loading grains for export. Warehousing capacities are insufficient and the processing industry stagnates. We have shifted from "ship to mouth" to "soil to mouth". India, due to its unique characteristics, experienced an agricultural revolution which was not accompanied by a diet revolution.
With very little scope for export, we can try the Nurksian experiment of grain-for-employment-guarantee kind of schemes. Secondly, we have to make up for the lack of diet revolution by slowly encouraging secondary and tertiary foods.
Most important, we must get rid of the FCI and its highly statised procurement system. We introduced the MSP because if you banned exports and imported in a non-commercial way and prices got depressed, it became the government’s responsibility to offer some kind of a guarantee.
Once the grain movement restrictions are removed, it’s not the government’s moral responsibility to protect the market. What we need is a marketing revolution so that we can get rid of the MSP. We can encourage companies to build certified warehouses, which examine the quality and protect the foodgrain from rotting. My report recommends this. And when the farmer keeps his grains with the warehouse, these private companies (which would have a banking licence) should give an advance of up to 70 per cent of the market price for the amount. The warehousing receipts should be considered as negotiable instruments so that the questions of credit as also the later development and utilisation of excessive grains get resolved.
The PDS can never be successful because anything that’s bureaucratised develops shortages, as there are people who profit from shortages. So, how do we bring the poorest consumer into a normal marketing system? The correct way would be to give it at a low price outside the market mechanism. Also, make all your food subsidies directly available in the form of income supplement to the targeted community, so that government intervention is minimised. The government can encourage the futures market to stabilise prices.
(The Shetkari Sangathana leader spoke to Arindam Mukherjee)