Announce higher MSP for pulses, speed up procurement: CEA panel

New Delhi: In sweeping reforms aimed at boosting pulse production and checking prices, a CEA-led panel today called for raising the support price by up to Rs 1,000 per quintal and lifting of export ban and stock limit, besides promoting GM crops.

The report also suggested an extra allocation of Rs 10,000 crore to procurement agencies to buy dal on a "war footing" and production subsidies for farmers, besides reviewing of ban on future trading of pulses.

"Because pulses are grown in rain-fed areas, we need to give proper incentives to cover risk... Since the option of import is limited, the bottomline is we need to boost domestic production and productivity," CEA Arvind Subramanian told reporters after submitting the report to the finance minister.

Among steps required to be taken immediately, he said the procurement of kharif pulses should be geared up in a war footing mode to support farmers as prices of moong have dropped below the minimum support price (MSP) and even tur prices are heading lower.

To encourage farmers to grow pulses in coming seasons, he suggested a hike in MSP of gram by Rs 500 per quintal to Rs 4,000 for the 2016 rabi season to start from the next month.

He also recommended a sharp hike in MSP of tur and urad to Rs 6,000 for the kharif 2017. At present, the MSP of tur and urad is Rs 5,050 and Rs 5,000 per quintal, respectively.

"MSP for other pulses should be increased by the same per cent as calculated in this report for tur, urad and gram," he said further and suggested that the farm price advisory body CACP should review its methodology to fix MSP for various crops.

He also said MSP of tur should be raised to Rs 7,000 per quintal in 2018 when short duration kharif variety is ready for commercialisation.

Asked if hike in pulse MSP will impact inflation, he said, "I don't think increase in MSP will have any impact on inflation. The MSP increase will boost supply in the immediate term and bring down prices."

To encourage pulses in irrigated areas and rice fallows, the CEA suggested that the government should give production subsidies of about Rs 10-15 per kg to farmers via DBT.

Stating that MSP alone will not be enough to induce farmers to switch to pulses, Subramanian said, "This kharif season, the government should launch a war-effort to procure moong, tur and urad at their respective MSPs. It is meaningless if MSP is not backed up by procurement."

He also asked the government not to take "blunt steps" to check prices and called for immediate lifting of ban on exports and stock limits on traders.

Since pulse yields in India are below the world average, the CEA favoured development of GM technology to boost production and productivity, to boot. "We need to clearly signal that we are open to GM technology in pulses," he said.

India is the world's largest pulses producer, but still it imports nearly 6 million tonne to meet its domestic demand. With domestic production declining to 17 million tonne level in last two years because of drought, the country witnessed high prices of dal, especially tur and urad.

On trade related policies, the report suggested that stock limits and export bans must be lifted immediately.

"At the very least, stock limits on wholesalers must be lifted followed by similar actions in relation to retailers. State governments should also be encouraged to take pulses out of their APMC Acts," stated the report titled 'Incentivising pulses production through MSP and related policies'.

Emphasising on the need to boost procurement, the report recommended that the government must allocate an additional Rs 10,000 crore to various procurement agencies NAFED, FCI and SFAC. Financing must be consistent with expected procurement, it added.

In the current kharif season, procurement will have to be undertaken by existing government institutions.

However, for the future, there is a need to shore up the institutional arrangements, including creation of additional institutions with a variety of governance structures for pulses, the CEA said.

"Given that pulse procurement has generally been ineffective in the past, monitoring of procurement at the highest level is an urgent priority," he said in the report.

Favouring creation of buffer stock of pulses, the CEA said the stocks should be built up gradually but opportunistically when prices are relatively low. "This year will probably be an excellent time to begin sizeable buffer stocking operations."

He said pulses deteriorate more quickly than cereals, suggesting more efficient management of the buffer stock. "Efficient stock disposal under clear protocols will need to be spelt out," Subramanian added.

On GM pulses, the report said pulse research currently attracts less public attention than research on cereals. Yields in India are relatively low compared with those abroad.

"A pre-requisite for increasing yields in pulses is to clearly signal the openness and encouragement to GM technologies. In pulses, breeding is limited both by the narrow genetic base of varieties and their high susceptibility to pest and disease attacks. Hence, molecular breeding and GM technology are vital," it said.

Moreover, much of the research is being (and will be done) by Indian scientists and institutions, minimising the possibility of monopoly behavior by foreign corporations. Promoting GM would be a way of promoting Create in India, it added.

"Indian scientists have already made progress: GM pod borer insect pest-resistant chana and arhar have been developed by Assam Agricultural University and ICRISAT respectively, both public institutions. These should be quickly cleared once they are ready for use," it suggested.

The report concluded that enhancing domestic productivity and production of pulses rapidly and sustainably is the only reliable way of minimising volatility in pulse market and safeguarding interests of farmers and consumers.