The UPA Government is confronting a daunting challenge in announcing concrete measures for taming the prices of agricultural commodities, in the budget of 2011-12. Food grains inflation is still not under control. The crude prices are spiraling higher and higher and fear of increasing food subsidy bill.
 
Global agricultural commodity prices are showing signs of upswing, driven both by the increase in consumption demand, subsequent stagnation in production and adverse agri-weather development in major countries. Several global bodies have indicated that currently the global rates for sugar, cereals and edible oils are appreciably higher and are expected to escalate further. Thus, the opportunity to use imports as a weapon to contain domestic food prices is quite limited. As per studies of various weather forecasting models, the year 2011 and 2012 are expected to witness more adversities in the different agro-climatic regions of the world.
 
Thus we see that the Indian Agricultural Scenario is heading towards stiffer challenges ahead. The recent kharif production and the expected good rabi crop has eased the pressure partially but, in few commodities, where the import dependency is above 30 percent, the prices continues to be very volatile. The only way out of the turmoil is to design and implement specific measures to ensure increased supply of such commodities.  
  
Expectations from the Government:
 
There is need to increase the agricultural productivity. There is a need for developing a new system which involve a direct transfer of subsidy to farmers and also a system that would promote nutrient-based subsidy regimes. Implementation of nutrient based subsidy would allow company to produce balanced and complex fertilizers which were not competent under product subsidy regime. At present, there are only 15 out of 40 fertilizer products which are covered under product based subsidy regime.

Effective measures to be announced to ensure increased supply of essential commodities to keep the inflationary powers in control

New medium to long term irrigation projects to be commissioned as National Projects by Government

There is a serious need to address the problem of distribution to arrest the price rise in food items. The release of food stocks and their sale in the open markets needed to be properly monitored. Increased cooperation is required from the State Governments for lifting surplus stocks allotted to them and strengthening of the public distribution system.

It is expected that the government would take steps towards waiving of taxes on essential commodities to ensure increased supplies.
 
If the above areas are adequately addressed, Indian agriculture situation would improve immensely and the ‘aam admi’ can also have a sigh of relief from the heating prices.

Dr. Hanish Kumar Sinha, Head - Trade and Commodity Intelligence Group, NCMSL