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Kerala PSC Indian Economy Book Study Materials Page 215Book's First Page
ri lt re and ood ana ement 8.21 2012). The production of potato alone is Market Sale Scheme (OMSS). This is aimed at about 35 MT. serving the following objectives: (v) Cold storage facility is available for (i) to enhance market supply of foodgrains; only 10 per cent of fruits and vegetables (ii) to exercise a moderating influence on produced in India (Planning Commission open market prices; and 2011). (iii) to offload surplus stocks. To bridge the gap between the requirement Under the Open Market Sale Scheme and availability of scientific storage capacity is (Domestic), the government now adopts a policy the immediate need of the hour. For this, it is of differential prices to encourage sale of older advisable to promote the policies by which private stock first—sticking to the following policy stance: sector investment can be attracted to it. (i) Keeping the reserve price above MSP, economic cost of fooDgrAins but reasonably below the acquisition cost or economic cost of wheat, so that The economic cost of foodgrains consists of three the buyers remain attracted to purchase components, namely the MSP including central of wheat from the mandis during the bonus (the price paid to farmers), procurement harvest season and the market remains incidentals, and the cost of distribution. The competitive. economic cost for both wheat and rice witnessed (ii) Maintaining that the market price during significant increase during the last few years due the lean season does not increase much to increase in MSPs and proportionate increase and inflation remains under check. in incidentals as well as other costs. As per the Government, the economic costs of wheat and Price stAbilisAtion funD rice in 2017–18 are estimated to be over Rs. 32 and Rs. 24 per kg, respectively (they were around The Government of India, by late March 2015, Rs. 20 and Rs 15 in 2010–11). launched the Price Stabilisation Fund (PSF) as a Central Sector Scheme to support market High economic cost necessitated a detailed interventions for price control of perishable agri- review of the open-ended procurement policy, horticultural commodities. The cost to be borne especially in states that offer high bonus on top between the centre and the states in equal ratio of MSP and those that impose high taxes and (in case of the North Eastern-states, the respective statutory levies, as well as stocking and distribution share will be 75:25). The scheme will commence policies. In this regard, the government set up a with only two crops, viz., onion and potato. High Level Committee (HLC) in August 2014 (Shanta Kumar as its Chairman) to suggest inter- alia restructuring or unbundling of the FCI with FArm suBsIdIes a view to improve its operational efficiency and Farm subsidies form an integral part of the financial management. government’s budget. In the case of developed countries, the agricultural or farm subsidies oPen mArket sAle scheme compose nearly 40 per cent of the total budgetary The FCI has been undertaking sale of wheat at outlay, while in India’s case it is much lower pre-determined prices (reserve prices) in the open (around 7.8 per cent of GDP) and of different market from time to time, known as the Open nature.