Finance Commission forms group to devise ways to incentivise states for agri reforms

The discussion in the meeting covered recent agriculture related reforms including barrier-free trade and amendment to the Essential Commodities Act announced as part of the Rs 20 lakh crore economic package to help mitigate the impact of COVID-19 lockdown. The meeting also held discussions on the framework/ recommendations given by the commission in its report for 2020-21 regarding performance grants to states for agricultural reforms, the statement said.

The 15th Finance Commission on Friday decided to form a group to devise a mechanism to incentivise states for carrying out agricultural reforms announced as part of the Rs 20 lakh crore stimulus package. A decision in this regard was taken by commission's chairman N K Singh in a meeting with Agriculture Minister Narendra Singh Tomar and senior officials of his ministry.

The group's views will be included in the commission's final report for the period 2021-26, an official statement said. The group consists of Finance Commission member Ramesh Chand, Agriculture Secretary Sanjay Agarwal and Agriculture, Research and Education Secretary T Mahapatra.

The group has been set up "to devise mechanism for incentivisation of states in areas of agricultural reforms agenda for the purpose of inclusion in the Commission’s recommendations in its final report", it said. The discussion in the meeting covered recent agriculture related reforms including barrier-free trade and amendment to the Essential Commodities Act announced as part of the Rs 20 lakh crore economic package to help mitigate the impact of COVID-19 lockdown.

The meeting also held discussions on the framework/ recommendations given by the commission in its report for 2020-21 regarding performance grants to states for agricultural reforms, the statement said. The agriculture ministry made a detailed presentation on recent steps taken by the government for upliftment of the sector and also on the implementation and budget requirement of the ministry for the period 2021-22 to 2025-26.

Earlier, the commission had also constituted a Committee on Agricultural Exports under the chairmanship of ITC Chairman and Managing Director Sanjeev Puri. The committee discussed some key points on farm exports and said India exports 70 per cent of its agriculture value to 20 countries. There are still opportunities to export more to Europe and the US. "While India imports over USD 20 billion in agriculture products, it still maintains a significant trade surplus of USD 18 billion," it said.

India's top 50 commodities and agriculture products make up 75 per cent of its total exports. The country has competitive advantage over other countries in agriculture as its diverse agro-climatic conditions creates diverse crop portfolio potential. However, given the competitive edge, India is only ranked 11th globally in terms of agriculture exports, it added.

In a separate statement, the commission said the rural development ministry has submitted its memorandum for the award period of 2020-21 to 2025-26, where they projected the requirement of Rs 82,946 crore for five years. The commission held the meeting with the ministry with a view to garner their views on the general framework given by the 15th Finance Commission in its report for 2020-21 on the maintenance of Pradhan Mantri Gram Sadak Yojana (PMGSY) roads.

The meeting also discussed the recent announcements made by the government for rural development together with the proposal of the ministry for maintenance of PMGSY roads for consideration of the commission on the grants/performance incentives to be recommended for the states for the period 2021-26 within the provisions of its terms of reference. Further, it said that the ministry made a detailed proposal on maintenance funds for PMGSY roads.

According to the proposal, it said, as per the census of 2011, 45,614 habitations of population over 250 are unconnected as of now. The burden of connecting the balance unconnected has a financial implication of Rs 1,30,000 crore, it added.