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ANALYSIS

New policy approach needed for agri progress, says OECD-ICRIER report
Saturday, 07 July, 2018, 08 : 00 AM [IST]
Our Bureau, New Delhi
India will need to accelerate existing reform efforts and launch bold new policy initiatives for the past successes its agriculture sector to continue into the future. This was stated by Agriculture Policies in India, a new publication by the Organisation for Economic Co-operation and Development (OECD), the Indian Council for Research on International Economic Relations (ICRIER) and India’s Department of Commerce.

The country has made tremendous economic progress since the mid-1990s, raising gross domestic product (GDP) per capita by over five per cent per year, cutting the incidence of poverty in half, significantly decreasing undernourishment and transforming itself into a major agriculture exporter.

The report proposed a comprehensive set of policy measures that, taken together, would raise incomes and well-being of farm households, improve nutrition outcomes for the most vulnerable members of Indian society, enable the farm and food sector to grow sustainably and strengthen India’s competitiveness in global food markets.

It highlighted both the notable progress made by the country’s agricultural sector over the past two decades and the important challenges now confronting the sector: declining but still persistent food insecurity and nutrition deficiencies, large numbers of small and resource poor farms, increasing water scarcity, low productivity growth and the uncertain impacts of climate change.

The report also highlighted the opportunity for policymakers to rebalance their efforts away from complex, volatile and often competing market interventions in favour of measures that target the nutrition needs of the poor and the productive possibilities of farmers and rural residents.

“Many of the policy recommendations in the report are well known to the Indian government, and action on some are already underway,” said Ken Ash, OECD Director for Trade and Agriculture. “But more can and should be done, and we look forward to continuing to work with India, and to support its efforts to improve outcomes for consumers and farmers alike.”

Building on over 30 years of agriculture policy analysis at OECD, the study provided for a unique quantification of how government support impacts farmers and consumers. It uses a consistent methodology which also allows India’s agricultural policy performance to be compared to over 50 other emerging and developed countries, comprising 80 per cent of global agricultural production and trade.

Farmers in India face complex domestic market regulations and import and export trade restrictions, which together often lead to producer prices that are below comparable international market levels.

“Despite large subsidies for fertilisers, power and irrigation which offset somewhat the price-depressing effect of market interventions, the overall effect of policy intervention over the 2014-16 period is a six per cent annual reduction of gross farm revenues,” according to the report.

“Consumers pay on average 25 per cent less across all commodities as the result of policy interventions. However, in spite of the government’s efforts to keep prices low, food insecurity and malnutrition persist, in part because the public food distribution system is poorly targeted, too costly and subject to large inefficiencies and waste,” it added.

The report made comprehensive recommendations to support food security and farmer incomes in an inclusive and sustainable manner. The policy indicators developed for this study will be updated annually, and published next in the 2019 edition of OECD’s annual Agricultural Policy Monitoring and Evaluation report.
 
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