English Hindi


Governance & Social Justice

International Relations



NITI Aayog suggestions on farm Economy

NITI Aayog suggestions on farm Economy


  • GS 3 || Economy || Agriculture || Agricultural Prices

 Why in News?

  • NITI Aayog proposes some new rules to improve farmers’ income

 Key Proposals:

  • Transform the Commission for Agricultural cost and Prices (CACP) into Agricultural Tribunal. One of the purposes of CACP is to recommend MSP (Minimum Support Price) to the government.
  • Replace the MSP (Minimum Support Price) with Minimum Reserve Price (MRP) should be considered with auctioning and the price be decided by the owner of the commodity. That is called the MRP (Minimum Reserve Price). Farmers will fix the minimum auction price.
  • Increase the government collection centers and warehouses at the village level or the block level in intense manner.

 Concerns with Proposal

  • Purpose of Tribunal – Tribunals are supposed to adjudicate disputes, not regarding any price issue. Prerogativesof CACP are also a concern that who will do the job of CACP. A tribunal doesn’t have the expertise on MSPs and other concerned issues.
  • MRP – Minimum Reserve Price: MSP at present is determined by keeping in view many factors; Production cost, demand factor, supply factor etc. along with all this factors. NITI Ayog proposes that MSP is only a ‘partial solution’ of the farmers. But, still there are various necessities are required in MRP. E.g. Efficient Agricultural Market, which is always topsy-turvy India, also the issue of touts and middlemen, diversity of the market.
  • Expansion of Storage, Practically Difficult: Over the past many years, many investments have been put in crop procurement by the government in order to improve it. But govt. somehow faltered in some areas of storing. So, some plights are involved in NITI Ayog.

 Other Proposals

  • Ending Subsidy on power and water should be implemented or eliminated. Rather Micro-Irrigation Facility is a better facilitation for the farmers.
  • Export Policy – A stable export policy is really important for Agrarian economy in order to gain maximum revenue.
  • Dilution of ECA (Essential Commodity Act) – A list of ECA are mentioned and it should be diluted. Trading of ECA are restricted, e.g. If a particular agricultural produced is under the ECA list, it can’t be exported or there are some restriction on it. It poses a dilemma in the farmers to sell the commodities among the farmers in choice of their commodities, which further exacerbate their income earning. So, it should be thawed by some magnitude.
  • Promote Contract Farming – It will bolster the mobilization and pooling of small and fragmented land holdings. This will ameliorate the agriculture in ‘Economy of Scale’ method. Small and Marginalised can be brough together.
  • Encourage Futures Trading for better price discovery.
  • Off-season sale – sale of farm produce at relatively higher prices in off-season.
  • Fiscal ending should support full-fledged infrastructure on Post-harvest Value chain, which will help farmers to achieve or to avail the financial or fiscal incentives given by government.

 Additional facts

  • CACP (Commission for Agricultural cost and Prices (CACP) :
  • An attached office of the Ministry of Agriculture and Farmers Welfare.
  • in January 1965.
  • Members: 5 Members body, 1st – Chairman, 2nd – One Member (Official), 3rd – One Member Secretary, and 4th – two Members (Non-Official).
  • The non-official members are representatives of the farming community and usually have an active association with the farming community.Job – To recommend minimum support prices (MSPs) on 22 Kharif and Rabi crops to incentivize the cultivators to adopt modern technology, and raise productivity and overall grain production in line with the emerging demand patterns in the country.

 ECA (Essential Commodities Act)

  • in 1955,
  • Job – to ensure the delivery of certain commodities or products, the supply of which if obstructed owing to hoarding or black-marketing would affect the normal life of the people. This includes foodstuff, drugs, fuel (petroleum products) etc.