Govt should move away from trade restrictions to improve farm revenues: Report

Farmers | The government also announced Rashtriya Kamdhenu Aayog, a scheme to enhance the productivity of cows.

Despite several support schemes provided by the Indian government, why is it that Indian farmers get poor returns? A report by Organisation for Economic Cooperation and Development (OECD) and the Indian Council for Research on International Economic Relations (ICRIER) suggests that implicit taxing of farmers and heavy subsidizing for consumers give negative results to farmers in India.

The Times of India reported that this study noted that domestic market regulations and trade policies have played a big role in depressing farmers’ incomes. There was a 6 percent annual reduction between 2014 and 2016 in gross farm revenue.

It was found that domestic prices compared with prices of farm commodities in the international markets show a lot of disparity.

The report noted, “Farmers in India face complex domestic regulations, import and export trade restrictions which lead to producer prices that are below comparable international prices.”

“Despite large subsidies for fertilisers, power and irrigation which somewhat offset the price-depressing effect of market interventions, the overall policy intervention show 6 percent reduction in farm revenues,” it added.

The report suggests that allowing private entities in the farm sector may help bring in helpful reforms. It also recommended moving away from export restrictions so that better revenues come in for the farmers.

Ken Ash, Director of OECD for trade and agriculture, said the government already knows many of the report’s recommendations and findings. “Action on some of the suggestions are underway but more can and should be done. We look forward to continue to work with India and support its efforts to improve outcomes for farmers and consumers alike.”