RBI governor Shaktikanta Das stated that the supply chain in agriculture needs improvement. Citing the high inflation rates of agriculture commodities in India despite farmers receiving very low prices for their produce.
Price to Farmers
The governor, in his opening remarks in third Suresh Tendulkar Memorial Lecture, highlighted the association of Shanmugaratnam with RBI. He stated that better communication facilities, easier access to credit and connected rural roads will contribute to the farmers’ income. Further, he emphasized on agriculture market reforms that shorten difference between price paid by the consumer and received by the farmers. He also mentioned the conclusions of a survey conducted in 85 mandis across different states. Referring it, Shaktikanta Das said that the price received by farmers varies from 28% to 78%. The perishable commodities get a lower price as against the non-perishable ones. He further stated that growth and financial stability walk hand in hand and neither should be compromised.
Inflation in Agriculture Commodities
The governor also mentioned the persisting high inflation that has adversely affected the economy by adding inequality in the distribution of income. Inflation rates in agriculture commodities remain a matter of high concern. Farmers do not receive the right price for their produce therefore, supply chain needs alteration. He further emphasized on the utilization of tax collections for social and infrastructural expenditure to maintain financial stability for economic growth.
Tharman Shanmugaratnam, senior minister of Singapore, at the lecture appreciated India’s growth. He praised the development in terms of electrification, sanitation and financial inclusion in the last five years. He also mentioned the importance of entering into a global chain by becoming more export-oriented. Referring to the high unemployment rate (30%), he advised focusing on increasing employment opportunities at a fast rate. Further, he spoke about rapid urbanization to decrease the pressure on the existing cities. The manufacturing sector must expand at a fast pace as it is the one accommodating bulk of labor. Besides, it will provide alternative employment opportunities other than agriculture. He also mentioned the need to prioritize the green economy for sustainable development.
In all, despite the government’s efforts since 2003, the farmers still struggle to get profits due to inefficiency in the supply chain management of agricultural commodities.