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THE GOVERNMENT MUST be complimented for standing firm, for once, despite pressure and provocation, on the issue of minimum support price (MSP) for certain kharif crops for the 2002-03 season. The decision not to hike the MSP for paddy and soyabean is absolutely justified simply because the existing rate is itself high enough to protect the interest of growers. It is gratifying that New Delhi has realised, albeit belatedly, the dangers of continually succumbing to political and sectoral pressures in the matter of support prices and procurement which, in effect, balloons the economic burden. It is said that agriculture is an economic activity that ensures growth with equity. In recent years, however, the country experienced agricultural growth, but not exactly with equity because of the Government's pricing and intervention policies that favoured some States and rich farmers over others. Rice and wheat, grown typically in well-endowed, irrigated land, have won official largesse, while coarse grains — typically grown in poor, rain-fed tracts — have had little support. Production increases have come largely on area expansion, and not through productivity increases, while quality issues continue to dog many a produce.

Indeed, no time is more propitious than this for the Government to break away from the past and remove the known distortions in food management policies. Decisions on MSP hikes are taken well after completion of sowing operations, pre-empting farmers from exercising an informed choice about what crop to grow. The MSP as a tool should be used to encourage the area shift and crop diversification the country so badly needs. Applying the same rationale of rice for wheat, the Government must announce well before the sowing season, status quo on the MSP for it. This will send a clear signal to farmers that annual support price increases cannot be taken for granted. The next step for the Government — a more unpalatable one — would be to change the open-ended procurement policy, and place a ceiling on the volume of rice and wheat to be purchased. The annual procurement should be limited to the needs of the public distribution system. The grain market would then be largely free from state-induced distortions and farmers will grow those crops that give them maximum benefit under free market conditions.

It must be recognised that in the farm sector, supply response to price is inadequate. While farmers must obtain remunerative prices, higher prices alone do not automatically translate to higher output, yield or quality. Non-price and non-trade factors can help bring about accelerated growth in production and fetch better prices for growers. Farm technology, research and extension, input delivery, credit, rural infrastructure and farm-related services can bring tangible benefits to producers. In the last 10 years alone, OECD countries spent on an average $53 billion per annum on what is called support for general services to agriculture that includes advisory services, training, research and development, inspection, infrastructure and so on. India's investment record in these areas is pathetic. State governments have an important role to play in strengthening agriculture and rural infrastructure; but it is a pity many are near bankrupt.

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