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INDIAN ECONOMIC POLICY & PLANNING

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F.Y.B.Com. SEMESTER: II UNIT- II

 INDEX: UNIT PAGE NO.

 AGRICULTURAL SECTOR: II

[A]. NEW AGRICULTURE STRA TEGY [GREEN REVOLUTI ON]: 02 – 03

[B]. NATIONAL AGRICULTURAL POLICY DOCUMENT 2000 : 04 – 05

[C]. SECOND GREEN REVOLUTION: 05 – 06

[D]. RURAL CREDIT IN INDIA -PROBLEMS AND MEASURES : 06 – 07

[E]. SOURCES OF AGRICULTURAL CREDIT IN INDIA : 07 – 10

[F]. RECENT POLICY MEASURES BY THE GOVERNMENT FOR

AGRICULTURE SECTOR:
10 – 11

[G]. ISSUE RELATED TO DIRECT AND INDIRECT FARM

SUBSIDIES IN INDIA:
11 – 12

[H]. MINIMUM SUPPORT PRICE : 12 – 13

[I]. HISTORY AND TREND OF MINIMUM SUPPO RT PRICE: 13 – 14

[J]. PUBLIC DISTRIBUTION SYSTEM 15 – 16

[K]. IMPORTANCE OF PDS IN ALLEVIATING POVERTY 16 – 16

[L]. DISASTER MANAGEMENT: 16 – 19

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AGRICULTURAL SECTOR

MERVIN CLASSES
What do you mean by New Agriculture Strategy? Discuss its main achievements and
weakness.

[A]. NEW AGRICULTURE STRATEGY [GREEN REVOLUTI ON]:

[a]. MEANING:
The new agricultural strategy was adopted in India during the Third Plan,i.e., during 1960s. As
suggested by the team of experts of the Ford Foundation in its report “India‟s Crisis of Food and
Step to Meet it” in 1959 the Government decided to shift the strategy followed in agricultural
sector of the country.
This report suggested introducing intensive effort for raising agricultural production and
productivity in selected regions of the country through the introduction of modern inputs like
fertilisers, credit, marketing facilities etc.
[1]. IADP (Intensive Area Development Programme):
In 1960, from seven states seven districts were selected and the Government introduced a pilot
project known as Intensive Area Development Programme (IADP) into those seven districts.
[2]. IAAP (Intensive Area Agricultural Programme):
Later on, this programme was extended to remaining states and one district from each state was
selected for intensive development. Accordingly, in 1965, 144 districts (out of 325) were selected
for intensive cultivation and the programme was renamed as Intensive Agricultural Areas
Programme (IAAP).
[3]. HYVP (High Yielding Varieties Programme):
In the Kharif (autumn crops) season in 1966, India adopted High Yielding Varieties
Programme (HYVP) for the first time. This programme was adopted as a package programme
as the very success of this programme depends upon adequate irrigation facilities, application of
fertilizers, high yielding varieties of seeds, pesticides, insecticides etc.
In this was a new technology was gradually adopted in Indian agriculture. This new strategy is
also popularly known as modern agricultural technology or green revolution. As the new HYV
seeds require shorter duration to grow thus it paved way of the introduction of multiple cropping,
.i.e to have two or even three crops throughout the year.
[b]. ACHIEVEMENTS OF GREEN REVOLUTION:
[1]. Progress in Food grains Production:
The most important achievement of new strategy is the substantial increase in the production of
major cereals like rice and wheat. The increase in the production of food crops since 1960-61.
Progress in Food grains Production: (million tonnes)
Item 1960-61 1980-81 2013-14
Rice 35 54 106.5
Wheat 11 36 95.9
(a)Total cereals 69 119 245.5
Total Pulses 13 11 19.3
Total food grains (a +b) 82 130 264.8
Reveals the production of rice has increased from 35 million tonnes in 1960-61 to 54 million tonnes in
1980-81 and then to 106.5 million tonnes in 2013-14, showing a major breakthrough in its production.
The yield per hectare has also improved from 1013 kgs in 1960 to 1101 kg in 2013-2014.

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Again the production of wheat has also increased significantly from 11 million tonnes in 1950-51
to 36 million tonnes in 1980-81 and then to 95.9 million tonnes in 2013-2014.
During this period, the yield per hectare also increased from 850 kgs to 3,075 kgs per hectare
which shows that the yield rate has increased by 369 per cent during last six decades. All these
improvements resulted from the adoption of new agricultural strategy in the production of wheat
and rice.
Total production of food grains in India has been facing wide fluctuations due to vagaries of
monsoons.
In spite of these fluctuations, total production of food grains rose from 82 million tonnes in 1960-
61 to 130 million tonnes in 1980-81 and then to 213.5 million tonnes in 2003-04 and then
increased to 264.8 million tonnes in 2013-14.
[2]. Production of cash crops in India:
Production of cash crops in India
Item 1960-61 1970-71 1980-81 2013-2014
Sugarcane (Million tonnes) 110 126 134 350.0
Cotton (Million bales) 6 5 7 36.7
Jute and Mesta (Million bales) 4 6 8 11.6
Oilseeds (Million tonnes) 7 10 9 32.9

The new agricultural strategy was very much restricted to the production of food grains, mostly
wheat and rice. Thus, the commercial crops like sugarcane, cotton, jute, oilseeds, could not
achieve a significant increase in its production.
Above table reveals that the production of sugarcane and other cash crops recorded some
increase during last five decades but this increase cannot be termed a significant one.
Thus, the green revolution was very much confined to mainly wheat production and its
achievements in respect of other food crops and cash were not at all significant.
[c]. WEAKNESSES OF GREEN REVOLUTION:
[1]. Growth of capitalist Farming:
Adoption of new agricultural strategy through IADP and HYVP led to the growth of capitalist
farming in Indian agriculture as the adoption of these programmes were very much restricted
among the big farmers, necessitating a heavy amount of investment.
[2]. Need for Institutional Reforms:
The new agricultural strategy failed to recognise the need for institutional reforms in Indian
agriculture.
[3]. Widened Income Disparities:
Green revolution widened the disparity in income among the rural population.
[4]. Mechanization of Agriculture:
New agricultural strategy along with increased mechanisation of agriculture created a problem of
labour displacement.
[5]. Widened Inter-regional Disparities:
Green revolution widened the inter-regional disparities in farm production and income.
[6]. Undesirable Social Consequences:
Green revolution has led to some undesirable social consequences arising from incapacitation
due to accident and acute poisoning from the use of pesticides.

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Explain the objectives and strategies of National Agricultural policy 2000.

[B]. NATIONAL AGRICULTURAL POLICY DOCUMENT 2000:

[a]. INTRODUCTION:
On 28th July, 2000, the NDA Government made public a National Agriculture Policy envisaging
over 4 per cent annual growth through efficient use of resources and technology and increased
private investment while emphasizing on price protection to farmers in the WTO regime.
The policy aimed at catapulting agricultural growth to over 4 per cent per annum by 2005. This
growth is to be achieved through a combination of measure including structural, institutional,
agronomic, environmental, economical and tax reforms.
[b]. OBJECTIVES:
The National Agricultural Policy (2000) encompasses the following important objectives:
[1]. Attaining a growth rate above 4.0 per cent per annum in the agricultural sector.
[2]. Attaining a growth which is based on efficient use of resources and also makes provision for
conservation of our soil, water and bio-diversity.
[3]. Attaining of growth with equity, i.e. attaining a growth whose impact would be widespread across
regions and different classes of farmers.
[4]. Attaining a growth that is demand-driven and cater to the need of domestic markets and ensuring
maximization of benefit from exports of agricultural products in the face of challenges from
economic liberalization and globalization.
[5]. Attaining a growth that is sustainable technologically, environmentally and economically.
[c]. STRATEGIES:
A 9 points strategy has been devised to meet the challenges of enhancing production and
strengthening rural economies while taking care to promote technically sound, economically
viable, environmentally non-degrading and socially acceptable use of country‟s natural
resources-land and water particular.
[1]. The unutilized wastelands will be put to use for agriculture and afforestation besides reclamation
of degraded lands. Integrated and holistic development of rainfed areas, a combined use of
surface and ground water, on farm water management, sensitization of farming community with
environmental concerns will be given priority.
A Survey and evaluation of genetic (Crops whose DNA has been modified) resources and safe
conservation of both indigenous (Plants growing in the place where they are from originally) and
exogenously (having and external origin) introduced genetic variability in crop productivity and utility
needs particular attention.
[2]. The use of bio-technologies will be promoted for evolving plants which consume less water are
drought resistant, pest resistant, contain more nutrition, give higher yields and are
environmentally safe. Conservation of bio-resources through their exist preservation in gene
(Plant DNA) banks an also in the original place of conservation in their natural habitats through
bio-diversity parks, etc will receive a high priority to present their extinction.
[3]. A regionally differentiated strategy for development of crop horticulture, floriculture, roots and
tubers, plantation crops, aromatic and medicinal plants, bee keeping and sericulture shall be
adopted. Live-stock breeding, dairying, poultry, agriculture shall be promoted through generation
and dissemination of appropriate technologies.
[4]. Research and extension linkages will be broad based and strengthened to improve effective use
of new technologies. Adequate and timely supply of quality inputs such as seed, fertilizers, plant
protection chemicals, bio pesticides, agriculture machinery and credit at reasonable rates to
farmers will be the endeavour of the government.

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[5]. Agriculture in India has suffered for want of infrastructural facilities. The National Agriculture
Policy gives emphasis on stepping up public investment for narrowing regional imbalances,
accelerating development of supportive infrastructure for agriculture and rural development
particularly rural connectivity.
[6]. A conducive climate will be created through a favourable price and trade regime to promote
farmers‟ own investments as also investments by industries producing inputs for agriculture and
agro-based industries.
[7]. High priority is also given to rural electrification, development of market infrastructure and setting
up of agro-processing units to reduce wastage particularly of horticulture produce and to
enhance value addition with the objective to create off-farm employment in rural areas.
[8]. To safeguard the interest of farmers, National Agricultural Insurance Scheme covering all
farmers all crops throughout the country with built in provisions for insulating farmers from
financial distress caused by natural disasters and making agriculture financially viable will be
made more farmer specific and effective.
[9]. Endeavour will be made to provide a package insurance policy for the farmers, right from sowing of
the crops to post harvest operations, including market fluctuations in the prises of agriculture
produce.

Why India needed second Green Revolution? Explain.

[C]. SECOND GREEN REVOLUTION

[a]. INTRODUCTION:
[1]. The first green revolution ran out of steam mainly because it was focused only on grain production;
it did not help the dry land farming and it was not scale neutral and thus helped only large farmers.
The call for second green revolution focuses on these issue by adopting a different strategy to
follow. The chief architect of Green Revolution was Dr. M.S. Swaminathan an agricultural scientist
who significantly improved the agricultural yield in the country.
 WHY INDIA NEEDED SECOND GREEN REVOLUTION?
India needs second green revolution to bring food security to its billion plus population, to remove
distress of farming community and to make its agriculture globally competitive. To achieve these
goals, yield rates of food grains, pulses, oil seeds, dairying and poultry, horticultural crops, and
vegetables need to be enhanced: and forward- backward linkages of agriculture with technology,
food processing industry needs to be strengthened to match soil to seed and product to market.
High productivity and better value addition by agro-processing are its key parameters.
The change in a farmer‟s mindset is also utmost necessary. A farmer typical believes that their
role is limited to grow crops only. They must be realized that their scope can increase from grain
production to food processing and marketing. Further, the farmers need to be encouraged to
move to produce crops where they have natural advantages. This is possible by concerted
efforts towards bridging the technology gap and assuring remunerative prices for the produce. It
will require new technologies and better farming practices. In this endeavour, marginal and small
farmers and raising agricultural productivity in dry areas need special attention without,
compromising on preserving soil and water resources. This demand proper coordination,
implementation and monitoring of the support policies in addition to allocation of resources.
The conceptual framework of second green revolution is based the below premises
(assumptions):
[1]. Attaining food security and sustainable farm profitability by embracing the entire agro-economy
from the farmer to consumer:
[2]. Harness the bouquet of new technologies such as Information Technology, Nanotechnology,
Biotechnology, Genetic Engineering, water efficient irrigation systems, environment friendly
pesticides, precision agriculture/farming organic farming, and biodynamic farming.

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[3]. It will focus not only on traditional farming but also on commercial farming and would promote
horticulture, floriculture, sericulture, aquaculture, plantation crops, medicinal crops, aromatic
crops, spices, etc.
[4]. It keep into view the local geographical and climate position, soil fertility and productivity and
nature, water, human resource and infrastructure availability and cost of production.
[5]. It is expected to be careful towards prospective yields of supply price or cost of production of
these crops so that productivity and production increases speedily with minimum costs of
production and minimum water as „more crop with per drop‟ and farmers whether big or small or
marginal can take benefit from this.
[6]. Massive crop diversification and multiple cropping is one of the key features of second green
revolution.
[7]. It aims for achieving self-sufficiency in pulses and oilseeds and doubling horticulture and
floriculture would be doubled in five years.
[8]. It also results in the forward and backward linkages and embraces an ecosystem of food
production, food processing and marketing.
[b]. CONCLUSION:
The Second Green Revolution of boosting food-grain output in India to 4000 million tons in next
15 years is need of the day. Its achieving is not very difficult. Rather it is achievable if mindset on
introducing newer technology is changed. India has to whole-heartedly embrace the new
technology. Private sector is better suited to deliver results than government managed schemes.
Governments on the other hand can play a key role in expediting irrigation schemes and
managing water resources.

Explain the types and Purpose of Agricultural credit in India.

[D]. RURAL CREDIT IN INDIA-PROBLEMS AND MEASURES:

[a]. INTRODUCTION:
Agriculture credit is an important prerequisite for agricultural growth. Agricultural policies have
been reviewed from time to time to provide adequate and timely availability of finance to this
sector.
Rural credit system assumes importance because for most of the Indian rural families, savings
are inadequate to finance farming and other economic activities.
The institutional credit system is critical for agricultural development. In India, a multi-agency
approach comprising co-operative banks, scheduled commercial banks and regional rural banks
(RRBs) are followed to allow credit to agricultural sector.
[b]. TYPE OF AGRICULTURE CREDIT:
The agriculture credit can be classified based on:
[1]. According to Tenure of Agricultural Credit i.e the credit requirement based on the time-period of
loans. It can of three types.
[i]. Short-Term:
It refers to the loans required for meeting the short –term requirements of the cultivators. These loans
are generally for a period not exceeding and repaid after the harvest. For example loans required for
the purchase of fertilizers, HYV seed, for meeting expense on religious or social ceremonies etc.
[ii]. Medium-Term:
These loans are for a period up to 5 years. These are the financial requirements to make
improvements on land, buying cattle or agricultural equipments, digging up of canals etc.

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[iii]. Long-Term:
These loans are for a period of more than 5 years and are generally required to buy additional land or
tractor or making permanent improvements on land.
[2]. According to Purpose of Agriculture Credit:
The agriculture credit based on purpose for which the credit is used can be of two types:
[i]. Productive:
Productive loans are the loans that are related to agricultural production and economically justified.
For example, purchase of tractor, land, seeds etc.
[ii]. Unproductive:
Unproductive credit are used for personal consumption and unrelated to productive activity for
example loans for expenditure on marriages, religious ceremonies etc.

Explain the Institutional and Non-Institutional sources of Agricultural credit in

India.

[E]. SOURCES OF AGRICULTURAL CREDIT IN INDIA:

[a]. INTRODUCTION:
Sources of agricultural credit can be classified into Institutional and Non- Institutional sources. Non-
Institutional sources include moneylenders, traders and commission agents, relatives and landlords,
but institutional sources include co-operatives, commercial banks including the SBI Group, RBI and
NABARD.
Following are the Non-Institutional sources of agricultural Credit in India.
[1]. NON-INSTITUTIONAL SOURCES:
The non-institutional finance forms an important source of rural credit in India, constituting around 40
percent of total credit in India. The interest charged by the non-institutional lenders is usually very
high. The land or other assets are kept as collateral. The important sources of non-institutional credit
are as follows:
i. Money-Lenders:
Money-lending has been the widely prevalent profession in the rural areas. The money-lenders
charge huge rate of interest and mortgage the property of the cultivators and in some cases even the
peasants and members of his family are kept as collateral.
ii. Other Private Sources:
[a]. Traders, landlords and commission agents:
The agents give credit on the hypothecation of crops which when harvested is used to repay loans.
[b]. Credit from relatives:
This credit is generally used for meeting personal expenditure.
[2]. Institutional source:
[A]. CO-OPERATIVE SOCIETIES:
The government of India started Co-operative Credit Societies In India in 1904 with a view to supply
adequate and cheap credit to the agriculturists. The progress of co-operative societies was very slow
and there is a record of only 3.1 percent total credit in 1951-52.
After independence, there is fast progress in co-operative credit. In 1995-96, it accounted to 22.5
percent.

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[a]. PRIMARY AGRICULTURE CREDIT SOCIETY (PACS):
PACS can be started with ten or more person, normally belonging to a village. The value of each
share is nominal so that even the poorest can become the member. They deal directly with the
farmer-borrowers, grant small term and medium term loans. Loans are generally for shorter period of
time normally for one year to carry out agricultural activities.
 Shortcoming of PACS
Though these societies make loans available to the farmer‟s convenient rates and has knowledge of
the problems and conditions still if suffers from some limitations.
The All- India Rural Credit Review Committee brought out the following weakness of the PACS.
[a]. Cooperative credit societies still form a small portion of the total borrowing of the farmers.
[b]. Tenants and small farmers find it difficult to satisfy their needs from the PACS alone.
[c]. Most primary credit societies are financially weak and even not able to meet fully even the
production-oriented credit needs of the farmers.
[d]. The rising numbers of over dues are increasing indicating the failure of the PACS.
[e]. PACS are not able to meet adequately and timely credit for the borrowing farmers.
[b]. DISTRICT CENTRAL COOPERATIVE BANKS (DCCBS):
They are the federation of the Primary credit societies in specified areas normally covering the whole
district. They have few individuals as shareholders who provide finance and management. Their
main aim is to lend to the Primary Credit society, but they are expected to attract deposits from the
public also.
[c]. STATE COOPERATIVE BANKS (SCBS):
They form the apex of the cooperative society in each state. They control the working of the DCCBs
in the state. It serves as the link between the NABARD and the cooperative central banks and the
village cooperative societies. It obtains its finance from the NABARD, its own share capital and
deposits from the general public.
 Weaknesses of the cooperative model:
[a]. The most needy farmers (tenants, Iandless farmer and share-croppers) get only about share of 3-5%
in the total credit supply.
[b]. The small and medium farmers get about 35% of share in the credit.
[c]. There has been uneven distribution of the cooperative benefits in different states.
[d]. The cooperative movement has not been able to increase the productive loan flow to the hilly and
tribal regions.
[e]. There is need for a proper manpower development in the cooperative credit societies.
[B]. COMMERCIAL BANKS:
The commercial banks provide direct and indirect finance to the farmers in the village area. They are
one of the important sources of rural credit. Commercial banks provide indirect finance for the
distribution of the fertilizers and other inputs. It even extends its credit to the businesses, which are
allied with the agricultural sector. For example, the Pump set business or the agricultural marketing
services.
 Shortcomings:
[a]. With the rising need of credit for the farmers and limited resources of the commercial banks, there
has been enormous pressure on the commercial banks.
[b]. There has been problem of coverage when it comes to covering of the villages by the commercial
banks.

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[c]. Commercial banks have been a witnessing some severe financial strain when it comes to credit
delivery and loan recovery.
[C]. REGIONAL RURAL BANKS (RRBS):
The idea Regional Rural banks came from the considerations of
[a]. Lowering the costs of rural banking, and
[b]. Operating such banks with local staff in an environment, which the poor people in the villages would
find most homely.
Its main objective is to provide finance to the small and marginal farmers, agricultural labourers and
artisans.
The RRBs have played a very important role in the rural economy as they have acted as an alternate
agency to provide institutional credit.
[D]. NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT:
It was set up in 1982 by the act of parliament to take refinancing function of the RBI in relation of the
Cooperative banks and the RRBs.
 FUNCTION OF NABARD:
It has dual role to play:
[a]. As an apex institution and [b] As a refinance institution
NABARD has inherited its apex role from RBI i.e. performing the role, which was played by RBI. It
services as a refinancing institution for all kind of credit and investment activities.
It provides short term and long-term credit to the state cooperative banks, RRBs and the other
institution approved by the RBI. It has the responsibility to inspect RRBs and the cooperative banks.
 REMEDIES TO THE RURAL INDEBTEDNESS:
[a]. Settlement of old debt:
State government and Union territories have enacted appropriate legislation to scale down the debts
of the small farmers, rural artisans and the landless labourers. In most states, legislation exists for
compulsory reduction of the ancestral debt and in few cases even for their liquidation also. The main
problem with such type of legislation is that the farmers are not able to take advantage either
because of the ignorance or the fear of the money lenders.
[b]. Reduce dependence on the Moneylenders:
In lieu of reducing the dependence of the rural people on the local money lenders the network of the
institutional credit structure comprising of the cooperative banks, RRBs and commercial banks is
being rapidly expanded throughout the country to provide timely and adequate credit. However,
these services are monopolised by the big farmers.
[c]. Control of new loans:
Only settlement of the old debt will not improve the farmer‟s situation rather it is important to be see
that they borrow for the productive purpose only.
However, there is a need to reduce the non-productive loans but the fact remains that social
functions form a very important part of a farmer‟s life so the need for the unproductive credit cannot
be totally discarded. In its report submitted in April 1976, Sivaraman committee outlined following
proposals:
[a]. Consumption loans for marriages, death, birth and other social function should be provided by the
government. Corporations and the nationalised banks to small and landless farmers.
[b]. Banks and cooperatives should provide similar loans to the marginal farmers.
[c]. Scheme should be devised to enable these farmers return this loans.

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 Measures taken by the government to tackle the rural credit problems.
[1]. Agriculture and Rural Debt Relief Scheme 1990:
It was also called Loan wavier scheme. The scheme provided relief up to 10,000 to the borrowers of
the public sector banks and the RRBs. The eligible loans under this scheme included:
[a]. Chronic overdue including interest
[b]. Loans taken by the borrower who died before October 2, 1989 and
[c]. The overdue of borrower who is declared insolvent, or whose petition is pending n the court to be
declared as insolvent.

Explain the recent policy measures by the Government to improve the agricultural
sector.

[F]. RECENT POLICY MEASURES BY THE GOVERNMENT FOR AGRICULTURE

SECTOR:
The recent policy measures taken by the Government to improve agricultural sector are as follows:
[1]. LAUNCH OF PRADHAN MANTRI FASAL BIMA YOJANA:
Farming has become an unreliable sector. Farmers are always unsure of the yield they‟ll reap, but
strive to draw the maximum benefits out of their investments and effort. Often farmers might be at the
receiving end, with natural calamities like droughts and flood affecting their yield adversely. To
resolve the problem of unpredictable nature of farming and prevent farmer suicides in the country, the
Government launched PM Mantri Fasal Bima Yojana in early 2016.
It‟s a crop insurance policy with relaxed premium rates on the principal sum insured for farmers.
Implemented with a budget of Rs 17,600 crore, this scheme will provide financial support to farmers
and cover for their losses.
This initiative is expected to go on floors from the next Kharif season of farming that is from June
2016.
[2]. AFTER GREEN, WHITE, AND GOLDEN (RELATED TO THE PRODUCTION HONEY AND
HORTICULTURE), IT’S TIME FOR BLUE:
The Cabinet Committee on Economic Affairs (CCEA) has approved Blue Revolution in India. It‟s an
integrated scheme designed to increase the productivity and profitability from aquaculture and
fisheries sources, inclusive of both inland and marine.
With a budget of Rs 3,000 crore offered by the government for the next five years, this scheme aims
to maintain an annual growth rate of six to eight percent of the agriculture and allied sector.
[3]. GOVERNMENT TO INVEST RS 221 CRORE TO IMPROVE MILK PRODUCTIVITY:
India boasts of being the largest producer of milk in the world with an annual output of 130 million
tonnes. However, with a milk-producing animal population of more than 118 million, the milk yields
per animal is very low.
To meet the steadily growing demand for milk, the National Dairy Development Board (NDDB) has
announced 42 dairy projects, under a budget of 221 crore. These projects shall focus on improving
the milk productivity of major milk-producing states like Uttar Pradesh, Maharashtra, Karnataka,
Tamil Nadu and the likes.
[4]. ENERGY-EFFICIENT IRRIGATION TO BE IMPLEMENTED:
A report says that in India more than two-thirds of the arable area lacks proper irrigational facilities.
Taking note of this, Power Minister said that the government is planning on investing Rs 75,000 crore
to provide energy-efficient irrigational facilities to farmers, over the next three to four years.

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Under this scheme, close to 30 million energy-saving pump sets would be given to farmers and this
cost would be recovered via savings in the electricity consumed. This would result in about 46 billion
kWh of power being saved and creation of 20 lakh jobs.
[5]. LAUNCH OF PARAMPARAGAT KRISHI VIKAS YOJANA:
The government has launched Paramparagat Krishi Vikas Yojana in order to address the critical
importance of soil and water for improving agricultural production. The government would support
and improve the organic farming practices prevalent in India.
Following cluster approach mode of farming, at least 50 farmers would form a group having 50 acres
of land to implement organic farming. The government aims to cover 10,000 clusters and five lakh
hectares of arable land under organic farming within three years.
Recently, the government has been active in investing in agricultural infrastructure such as irrigational
facilities, mechanised farming, and warehousing.
The growing use of genetically modified crops will also improve the sector‟s contribution of GDP.
While all of these initiatives look promising, in what way are they going to affect the current scenario
is something interesting to watch out for.
[6]. SOIL HEALTH CARD SCHEME:
Government has initiated Soil Health Card scheme to provide farmers Soil Health Card in a mission
mode. This card will contain the knowhow of the new trend in the soil and accordingly the required
quantity of fertilizers. Through that farmers will be capable enough to obtain more products on their
farms. Through this card, the farmers will know the fertility of their fields.
The expert will sort out the problem concerned with soil. Though these cards the farmers will monitor
the change of quality related to the soil after prolong use of the farms in agriculture process and they
will benefit from the soil card to maintain the health of the soil.

Explain the various issue related to direct and indirect farm subsidies in India.

[G]. ISSUE RELATED TO DIRECT AND INDIRECT FARM SUBSIDIES IN INDIA:

[A]. INTRODUCTION:
The Indian government has, since independence subsidized many industries and products from
petrol to food. On the other hand India has been found to be not so kind when it comes to sectors
other than that of agriculture, like education health and infrastructure. According to the UNESCO,
India unfortunately has the lowest public expenditure on higher education per student in the world.
A subsidy is essentially defined as a converse of a tax.
[I]. FARM SUBSIDIES:
Farm subsidies refer to the government financial support paid to the farmers and agribusinesses to
reduce their input expenditures and supplement their income. Farm subsidies are worldwide
phenomenon and India is of no exception.
Brief Background In the initial years of independence, agriculture was totally primitive with small and
fragmented land holdings.
The situation was such that India was facing acute shortage of food grains to cater to the ever rising
population of the country. To meet the crisis of deficiency of food grains required a shift from the
traditional agriculture practices to modern farm practices.
However, expensive cost of inputs like high yielding varieties of seeds, farm mechanization and
modern technology etc. deterred farmers to move towards adaptation to new technology. On the
recommendations of food grain price committee 1964, the Government of India started the scheme
of subsidies on purchase of various agriculture inputs to facilitate the farmers.

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The scheme not only helped farmers to gradually adapt to new practices for farming but also aided in
implementing green revolution by supporting farmers to invest in newly introduced seed-cum-fertilizer
technology.
Direct and Indirect Farm subsidies Agriculture subsides can also be categorized into direct and
indirect farm subsidies taking account the policy instruments used in providing them.
Direct Farm subsidies involve rendering cash to the recipient farmers. India provides direct
subsidies in very limited form like food subsidy, MSP-based procurement, etc. However, direct
farm subsidies are very common in most of the developed countries like US and Europe.
Indirect farm subsidies are not provided in the form of cash but supporting farmers in an indirect
manner.
For example- Providing cash directly to the farmers to buy fertilizers is an example of direct subsidy
whereas subsidizing fertilizer companies to provide cheap urea to farmers amounts to indirect
subsides.
Other example may include-Cheap credit facilities, farm loan waivers, reduction in irrigation
and electricity bills, investment in agricultural research, environmental assistance, farmer
training, etc.
[II]. KEY CONCERNS REGARDING FARM SUBSIDIES:
The key concerns regarding the subsidizing process still affecting the system are as follow:
[a]. Subsidies do not reach the marginalized farmers:
The Marginalized farmers, the main target audience for the government to come up with subsidies in
the first place are found wanting of the same. Effectively, the more well off farmers end up taking
more than their fair share.
[b]. The fiscal burden on the government:
The government fails to recover its costs because of taxation issues and is thus led to borrow from
other sources. Ineffective taxation policies end up taking their toll on the government‟s developmental
plans.
[c]. The APMC Act:
The APMC Act was set up by the government, as a means to improve the efficacy of the process of
the farmers getting their rightful price due to them, through the establishment of middlemen acting as
links to the chain. Sadly though, their main prerogative was rendered ineffective, due to their own
middlemen. The APMC act established mandis, where farmers auction their produce.
The presence of middlemen, effectively multiplied prices at each level which thus led to higher prices
and lower profits for the farmers.

Explain the meaning and objective Minimum support price.

[H]. MINIMUM SUPPORT PRICE:

[a]. INTRODUCTION:
Minimum Support Price is the price at which government purchases crops from the farmers,
whatever may be the price for the crops. Minimum Support Price is an important part of India‟s
agricultural price policy.
The MSP helps to incentivize the framers and thus ensures adequate food grains production in the
country.
It gives sufficient remuneration to the farmers, provides food grains supply to buffer stocks and
supports the food security programmes through PDS and other programmes.

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[b]. PROCUREMENT PRICE:
Sometimes, the government procures at a higher price than the MSP. Here, the price will be referred
as procurement price. The procurement price will be announced soon after the harvest. Normally, the
procurement price will be higher than the MSP, but lower than the market prices. The price at which
the procured and buffer stock food grains are provided through the PDS is called as issue price.
[C]. WHEN THE MSP IS ANNOUNCED?:
The minimum support prices are announced by the Government of India at the beginning of the
sowing season for certain crops on the basis of the recommendations of the Commission for
Agricultural Costs and Prices (CACP). Support prices generally affect farmers‟ decisions indirectly,
regarding land allocation to crops, quantity of the crops to be produced etc. It is in this angle that the
MSP become a big incentive for the farmers to produce more quantity.
[D]. WHAT ARE THE OBJECTIVES OF MSP?:
Government‟s agricultural policy has three important components- the MSP, Buffer Stocks and issue
of food grains through the PDS. The interconnectivity between the three is very clear. MSP helps ot
procure adequate food grains through FCI, state agencies and cooperatives. The PDS network
through the policy of issue price delivers it to the weaker sections.
MSP is price fixed by Government of India to protect the farmers against excessive fall in price during
bumper production years. The minimum support prices are a guarantee price for their produce form
the Government.
The objective of the MSP is thus to ensure remunerative prices to the growers for by encouraging
higher investment and production. It also aims to bring a balanced realization of sufficient food
production and consumption needs at the same ensuring adequate and affordable food grains to all
the people.
Thus the minimum support price is aimed to:
i. Assure remunerative and relatively stable price environment for the farmers by inducing them to
increase production and thereby augment the availability of food grains.
ii. Improve economic access of food to people.
iii. Evolve a production pattern which is in line with overall needs of the economy.

Write a short note on the History and trend of Minimum support price.

[I]. HISTORY AND TREND OF MINIMUM SUPPORT PRICE:

The MSP was declared for the first time in 1965 as a tool for agricultural price policy to meet the
various objectives. Since then, the MSP performs an important function in realizing the various
objectives related to agricultural price policy.
[A]. WHO DECLARES AND WHO PREPARES IT?
The Cabinet Committee on Economic Affairs (CCEA), Government of India, determines the Minimum
Support Prices (MSP) of various agricultural commodities in India based on the recommendations of
the Commission for Agricultural Cost and Prices (CACP).
[B]. WHAT IS OPEN ENDED MSP?
Government considers that some types of crops are vital for food security. To ensure and encourage
the production of such crops the government follows a much liberal procurement policy known as
open ended MSP.
In this case, there is no procurement target. The government allows the procurement agencies like
the FCI to buy whatever is offered by the farmers for sale at MSP. The major staple food items – rice
and wheat are the two principal commodities where government‟s role is pronounced.

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[C]. HOW MSP IS CALCULATED FOR EACH CROP?
The MSP is calculated and recommended by the CACP. For the calculation of the MSP, the CACP
takes into account a comprehensive view of the entire structure of the economy of a particular
commodity or group of commodities.
Other Factors include cost of production, changes in input prices, parity, effect on industrial cost
structure, effect on cost of living, effect on general price level, international price situation, parity
between prices paid and prices received by the farmers and effect on issue prices and implications
for subsidy. Commission makes use of both micro-level data and aggregates at the level of district,
state and the country.
There are various supply related information that are needed to estimate the MSP. These are – area,
yield and production, imports, exports and domestic availability and stocks with the
Government/public agencies or industry, cost of processing of agricultural products, cost of marketing
– storage, transportation, processing, marketing, services, taxes/fees and margins retained by
market functionaries, etc. are also considered.
Different Ministries and Departments help the Commission to arrive at the MSP. The estimates of
Cost of Cultivation/Cost of Production, an important input for forming the recommendation of MSP,
are made available to the Commission through the Comprehensive Scheme for Studying the Cost of
Cultivation of Principal Crops, operated by the Directorate of Economics and Statistics, Department
of Agriculture and Cooperation, Ministry of Agriculture, Government of India.
These estimates take into account real factors of production and include all actual expenses
in cash and kind incurred by the farmer in production, rent paid for leased in land, imputed
value of family labour, interest value of owned capital assets (exclud ing land), rental value of
owned land (net of land revenue), depreciation of farm implements and building and other
miscellaneous expenses.
[D]. HOW MANY COMMODITIES ARE COVERED UNDER THE MSP?:
Government announces minimum support prices (MSPs) for 22 mandated crops and fair and
remunerative price (FRP) for sugarcane.
The mandated crops are 14 crops of the kharif season, 6 rabi crops and two other commercial crops.
In addition, the MSPs of toria and de-husked coconut are fixed on the basis of the MSPs of
rapessed/mustard and copra, respectively.
The lists of crops are as follows:
 Cereals (7)- paddy, wheat, barley, jowar, bajra, maize and ragi
 Pulses (5) – gram, arhar/tur, moong, urad and lentil
 Oilseeds (8) – groundnut, rapeseed/mustard, toria, soyabean, sunflower seed, sesamum, safflower
seed and nigerseed.
 Raw cotton
 Raw jute
 Copra
 De-husked coconut
 Sugarcane (Fair and remunerative price)
 Virginia flu cured (VFC) tobacco
Procurement of agricultural crops is made by the FCI, state agencies and cooperatives.
A counterpart of the MSP is the Market Intervention Scheme (MIS), under which the state
government procures perishable commodities like vegetable items.

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Explain the objectives and features of Public Distribution System in India.

[J]. PUBLIC DISTRIBUTION SYSTEM:

Public distribution system is a structure formed by a government and includes chain of shops trusted
with the work of distributing basic food and non-food commodities to the disadvantaged group of the
society at very low prices.
The central and state governments share the accountability of regulating the Public distribution
system. While the central government is responsible for procurement, storage, transportation, and
bulk allocation of food grains, states government hold the responsibility for distributing the same to
the consumers through the established system of Fair Price Shops.
State Government are also responsible for operational responsibilities including allocation and
identification of families below poverty line, issue of ration cards, supervision and monitoring the
functioning of FPSs system (PDS) is an Indian food security system.
Established by the Government of India under Ministry of Consumer Affairs, Food, and Public
Distribution and managed cooperatively with state governments in India, it distributes sponsored food
and non-food stuffs to poor community of India. Some of the commodities distributed by food
department include staple food grains, such as wheat, rice, sugar, and kerosene, through as ration
shops established in several states across the nation. Food Corporation of India, a Government-
owned corporation, acquires and maintains the Public distribution system.
[a]. THE OBJECTIVES OF THE PUBLIC DISTRIBUTION SYSTEM ARE AS FOLLOWS:
[1]. To protect the low income groups (deprived section) by supplying then the essential commodities.
[2]. To ensure equitable distribution of the food grains and other essential commodities.
[3]. Regulating the prices of Essential Commodities in the open market.
The public Distribution System has been the responsibility of central and state governments. Central
government primarily deals with the buffer stock operations (though FCI) and controls the external
and internal trade of food grains. The Central government through its procurement activity tries to
even out the differences of surplus and deficit food grain producing state.
[b]. WORKING OF THE PDS:
FARMERS

CENTRAL GOVERNMENT

STATE GOVERNMENT

DISTRICT ADMINISTRATION

BLOCK ADMINISTRATION

GODOWNS

FAIR PRICE SHOPS

BENEFICIARY

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[c]. FEATURES OF THE PUBLIC DISTRIBUTION SYSTEM:
The features of the Public Distribution System are mentioned below:
[1]. Public Distribution System is a system of distribution of selected essential goods through the fair price
shops (ration shops or co-operatives owned by the government) which are operated by private
dealers under the government‟s control and direction.
[2]. Rice, Wheat and sugar are main food grains throughout the period. The other important items are
kerosene, edible oil that is distributed to deprived section of society.
[3]. The working of the Public Distribution System did not hamper the functioning of the free market.
Customers have liberty to either purchase through Fair Price Shops or form the open market.
[4]. The required amounts of food grains and other items are acquired by the government through
internal procurement and or through imports and a buffer stock is maintained with meet the demand
of shortage period.
[5]. The purpose of Public Distribution System is to offer basic minimum quantity of essential
commodities at lowest prices especially to poorer sections of society.
[6]. It has been principally an urban oriented system. Its origin as well as development has been in
sensitive urban areas where a scarcity of food grains and other essential commodities could become
political obligations of administration.

Write a short note on the importance of Public distribution system in alleviating

poverty in India.

[K]. IMPORTANCE OF PDS IN ALLEVIATING POVERTY:

PDS distributes commodities worth more than Rs 30,000 crore annually to about 160 million families
and is perhaps the largest distribution network of its kind in the world. It has acted as one of the main
pin in reducing the poverty by ensuring a stable food supply to the poor in the form of daily essential
commodities.
With efficient system of network, it has also taken a huge leap in ensuring a continuous supply of
surplus food stock in the time of crisis. In past India has witnessed some devastating droughts that
have had a huge impact on the economy and particularly the weaker section of the society. So the
importance of the PDS as a remedy to alleviate the poverty can be seen from the importance of daily
nutrition intake of a person particularly the poor.
Deprived of proper nutritional intake makes a man ill at some point of time, which further demands a
proper healthcare. With a limited income poor are always deprived of a basic healthcare facilities and
hence results in low attendance at the farm resulting in a low income.
Therefore, the person cannot afford a nutritional diet and again falls ill. The vicious circle of poverty
continues and a poor are trapped in the same. So, in way PDS have benefitted largely in removing
the poverty by contributing its share in the houses of rural and urban poor.

What is meant by Disaster Management? Explain Modern Disaster management in

detail.

[L]. DISASTER MANAGEMENT:

[A]. INTRODUCTION:
Disasters have adversely affected humans since the dawn of our existence. In response,
individuals and societies alike have made many attempts to decrease their exposure to the
consequences of these disasters, developing measures to address initial impact, as well as post-
disaster response and recovery needs. Regardless of the approach adopted, all of these efforts
have the same goal; disaster management.

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The motivating concepts that guide disaster management –the reduction of harm to life, property,
and the environment –are largely the same throughout the world. However, the capacity to carry
out this mission is by no means uniform.
Whether due to political, cultural, economic, or other reasons, the unfortunate reality is that some
countries and some regions are more capable than others at addressing the problem. But no
nations, regardless of its wealth or influence, are advanced enough to be fully immune from
disaster‟s negative effects.
[B]. TYPES OF DISASTER:
The following are some types of disaster:

i. Earthquake, ii. Volcanic eruption

iii. Tsunami, iv. Tropical cyclone (typhoon, hurricane)
v. Flood, vi. Landslide
vii. Bushfire (or wildfire), viii. Drought
ix. Epidemic, x. Major accident
xi Civil unrest

[C]. THE GENERAL EFFECTS OF DISASTER:

Typical effects of disasters are
i. Loss of life,
ii. Injury,
iii. Damage to property
iv. Damage to and destruction of subsistence and cash crops.
v. Disruption of production
vi. Disruption of lifestyle
vii. Loss of livelihood
viii. Disruption to essential services.
ix. Damage to national infrastructure and disruption to governmental systems.
x. National economic loss
xi. Sociological and psychological after effects.
[d]. MODERN DISASTER MANAGEMENT – A FOUR-PHASE APPROACH:
Comprehensive disaster management is based upon four distinct components: mitigation,
preparedness, response, and recovery.
Although a range of terminology is often used in describing them, effective disaster management
utilizes each component in the following manner:
[1]. MITIGATION:
Involves reducing or eliminating the likelihood or the consequences of a hazard, or both.
Mitigation seeks to “treat” the hazard such that it impacts society to a lesser degree.
[2]. PREPAREDNESS:
Involves equipping people who may be impacted by a disaster or who may be able to help those
impacted with the tools to increase their chance of survival and to minimize their financial and
other losses.

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[3]. RESPONSE:
Involves taking action to reduce or eliminate the impact of disasters that have occurred or are
currently occurring, in order to prevent further suffering, financial loss. Relief, a term commonly
used in international disaster management, is one component of response.
[4]. RECOVERY:
Involves returning victims‟ lives back to a normal state following the impact of disaster
consequences. The recovery phase generally begins after the immediate response has ended,
and can persist for months or years thereafter.

Disaster
Event

Preparedness Relief

Disaster
Management
Cycle

Mitigation Recovery

In practice, all of these factors are intermixed and are performed to some degree before, during,
and after disasters. Disasters tend to exist in a continuum, with the recovery from one often
leading straight into another.
In addition, while response is often pictured as beginning immediately after disaster impact, it is
not uncommon for the actual response to begin well before the disaster actually happens.

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NOTES

MERVIN CLASSES
‘102’, BLUE DIAMOND, FATEHGUNJ, VADODARA

STEPPING STONE TO SUCCESS