Policy Response Agriculture Sector 2: Economic YouTube Lecture Handouts

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Farmer՚s Income

  • Subsidizing Input Costs: Like Providing water, power and fertilizer subsidies to decrease the input costs.
  • Green Revolution: Increasing yields through better farming practices and timely availability of quality inputs like HYV seeds, Fertilizers etc.
  • Stabilizing Output Prices: Through minimum support prices (MSP) and public procurement.
  • Augmenting Non-Crop related Agriculture Income: KUSUM scheme.
  • Providing Direct Income Transfers to Farmers: Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) , KALIA, RYTHY BANDHU.

KUSUM Scheme

  • Launched by Ministry of New and Renewable Energy. Also known as Kisan Urja Suraksha evam Utthaan Mahaabhiyan.
  • Aim is Installation of solar pumps and grid connected solar and other renewable power plants in the country.
  • The scheme would ensure that sufficient local solar/other renewable energy based power is available for feeding rural load centres and agriculture pump-set loads. This will reduce input cost of diesel. And will be a stable source of income for rural households.

Agriculture Infrastructure Fund (AIF)

  • It is a Central Sector Scheme meant for setting up storage and processing facilities, which will help farmers, get higher prices for their crops. The scheme will be operational till 2029.
  • It will support farmers, FPOs, Agri-entrepreneurs, Startups etc. in building community farming assets and post-harvest agriculture infrastructure. Thus, will also give boost to NWR (Negotiable warehousing receipts) .
  • AIF is a medium – long term debt financing facility which will invest in viable projects for post-harvest management infrastructure and community farming assets through interest subvention and credit guarantee. ₹ 1 lakh crore of credit will be extended by banks.

Mega Food Parks: Revolutionary Step

  • Aims at establishing well developed and well linked food processing centre which will reduce post-harvest losses, promote crop diversification, ensure high income to farmer, solve logistics issue etc.
  • The scheme was introduced in 2008 to provide food processing infrastructure. The aims has been to develop integrated value chain, supply chain and to connect farmers with markets. Farmers will be indirectly connected to global supply chains.
  • Processed food industry accounted for 10 % of India՚s total exports. It will boost exports.
  • The annual post-harvest losses stands at ₹ 92,651 crore. Thus, the annual losses stands at 6 % of the total food production.
  • Food processing sector employs 7 million people.
  • In India, Processing Food industry for fruits & vegetables stands at 2 % , 35 % for milk and 6 % for poultry products.

MSP (Minimum Support Price)

  • FRP for sugarcane and MSP for 22 crops.
  • Paddy, Jowar, Bajra, Maize, Ragi, Arhar, Moong, Urad, Groundnut-in-shell, Soyabean, Sunflower, Seasamum, Niger seed, Cotton, Wheat, Barley, Gram, Masur (lentil) , Rapeseed/Mustard seed, Safflower, Jute and Copra
  • 3 formulas are there to calculate MSP. A2, A2 + FL, C2.
  • As per Shanta kumar committee report only 6 % of farmers have access to MSP.
  • A2 = Actual paid out costs. (Agri inputs, hired labour, capital, depreciation, interest, land rent, irrigation charges)
  • A2 + FL = A2 + imputed cost of family labour {Variable cost}
  • C2 = A2 + FL + (rental value of own land, interest on own fixed capital) : Fixed cost
  • MSP IN INDIA = 50 % more than Cost of Production. A2 + FL is used.

Practice Question

Q 1 Consider the following statements.

1) MSP is announced for 22 crops and copra is one among them.

2) For sugarcane, FRP is announced.

Which of the following are correct.

1) 1 only

2) Both 1 and 2

3) Only 2

4) Neither 1 and 2

Answer: Option 2

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