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February 24, 1999


'A foodgrain saved is a foodgrain produced'

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The Economic Survey for 1998-99 calls for marketing reforms in the fruits and vegetables markets with an object to eliminate large number of intermediaries operating in unregulated and unsupervised markets.

Expressing concern over the wide fluctuations in prices, specially those of onion and potato, the survey noted the prices of fruits and vegetables traded in the markets are governed by market forces of demand and supply.

The regulated market committee has no role in price correction and their fluctuations, the survey said and pointed out that the existing market regulations was geared to handle only foodgrains and there was little effort towards developing marketing infrastructure for bulk sale of fruits and vegetables.

''Seasonal and often very sharp decline in prices of some of the vegetables, particularly potato and onion and occasional sharp rise in their prices during the lean season, testifies to the imperfection of market mechanism for perishable agricultural commodites,'' the survey noted and pointed out the sufficient need of cold storage and refrigerated transportation up to the large urban consuming centres.

''The government would have to play a leading role in establishing appropriate infrastructure for storage and processing policies. Policies should also promote development of marketing infrastructure and integration of markets within and between states,'' the survey emphasised.

The survey estimates foodgrain production in the current year around 195.2 million tonnes, higher than the previous year level of 192.4 million tonnes. The foodgrains production was still lower than the peak production of 199.4 million tonnes in 1996-97. The rabi foodgrains output is likely to be higher at 96.5 million tonnes, higher by 5.2 million tonnes following good showing in the month of November/December.

The survey said growth in foodgrains output during nineties at 1.7 per cent is a matter of concern since it is just equal to annual population growth. Crop productivity levels would require to be enhanced particularly in the states of Bihar, Orissa and eastern Uttar Pradesh. The growth trend in the current decade needs to reversed to attain full food security.

Reviewing the weather conditions in the fiscal 1998-99 and its impact on agriculture, the survey said it experienced several setbacks to the performance of 1998 monsoon, which was normal as predicted by the meteorological department. Weather-related setbacks occurred first in May-June, when northern India experienced unprecedented heat wave conditions for many days with maximum temperature touching a high of 48 degrees.

This unusual phenomenon had caused an extreme state of moisture stress in some crops. Second, severe floods during the monsoon season affected production in parts of the country especially eastern India. The third quarter related aberration occurred in the post-monsoon period in late October, when there was heavy rainfall around Diwali resulting in damage to standing and matured paddy and cotton crops, besides vegetables such as potato and onion crops.

Pointing to the production loss in the post-harvesting period, the survey said, "A grain saved is a grain produced" should be India's motto in view of the fact that the country has almost reached a plateau in so far as cultivable land is concerned.

Subsidy on urea in 1998-99 estimated at Rs 69.83 billion out of a total fertiliser subsidy of Rs 99.83 billion (budget estimates). With the increase in urea prices from Rs 3.66 per kg to Rs four/kg with effect from January 28, 1999, the subsidy in the next fiscal year is expected to decline.

In continutation of the process of economic reforms, the scope of futures trading was also expanded to other commodities like oilseeds, oilcakes and edible oils. International futures trading was also allowed in pepper and castor oil. A number of measures were taken to improve credit flow to agriculture sector, which includes introduction of cash credit facility and kisan credit cards to farmers.


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