Noting that Indian Agriculture sector has witnessed a distinct transformation, Reserve Bank of India Governor Shaktikanta Das stressed that the country should now move to policy strategies that ensure a sustained increase in farmers’ income alongside reasonable food prices for consumers.
“India has now reached a stage in which surplus management has become a major challenge,” he said while delivering an address to CII national Council in Mumbai.
Pointing out that an efficient domestic supply chain becomes critical, he opined that the focus must now turn to capitalising on the major reforms that are underway to facilitate domestic free trade in agriculture. Das noted that the focus must turn to crop diversification, de-emphasising water-guzzlers, food processing that enhances shelf life of farm produce and minimises post-harvest wastes, agricultural exports which enable the farmers to take advantage of international terms of trade and technology and public and private capital formation in the farm sector.
He said that the amendment of Essential Commodities Act would encourage private investment in supply chain infrastructure, including warehouses, cold storages and marketplaces. Secondly, he mentioned that the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 would facilitate barrier-free trade in agriculture produce.
The governor also pointed out that the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 will empower farmers to engage with processors, aggregators, wholesalers, large retailers, and exporters in an effective and transparent manner. Stating that all the measures have opened a whole new world of opportunities for industry and businesses, he said that the consequential creation of jobs and augmentation of farmers’ income can indeed be enormous.
Changing Pattern of Energy Production – Renewable
In his address, the RBI Governor stressed that the shift to greener energy would reduce the coal import bill, create employment opportunities, ensure sustained inflow of new investments and promote ecologically sustainable growth.
Pointing out that the share of renewable energy in overall installed capacity has doubled to 23.4 per cent in March 2020 from 11.8 per cent of March 2015, he said that 66.6 per cent of addition to total installed energy capacity during the last five years was in the form of renewable energy.
Das said that accelerated depreciation benefits and fiscal incentives such as viability gap funding and interest rate subvention will have to reviewed. One of the major challenges is of reducing commercial, technical and transmission losses. “The end of cross subsidisation by industry for other sectors, and closing the gap between average cost of supply (ACS) and average revenue realised (ARR) will require speedier/accelerated DISCOM reforms (including privatisation and competition). A nationwide Grid integration that can take supply from renewable sources as and when generated is needed to take care of daily/seasonal peaks and troughs associated with renewable sources. These dynamic shifts in renewables could help increase India’s per capita electricity consumption, currently among the lowest in the world. Here too, Indian industry has a crucial role to play,” he said.
Information and Communication Technology and Start-ups
The Governor said that COVID-19 had adverse impact on start-ups and the Information and Communication technology. He noted that promoting young firms and start ups would be critical for greater employment generation and higher productivity led economic growth in the country. “It would be essential to reorient resources and policy focus in this direction. Innovation and ability to nurture ideas into actualisation would be the key challenge. In this context, private enterprise and investment have a game-changing role,” he said.
Supply/ Value Chains – Domestic and Global
Maintaining that global shift in global value chain (GVC) in response to COVID-19 and other developments will create opportunities for India, Das said that the focus should be on diversifying sources of imports and stress should be on greater strategic trade integration.
Though the country has seen much growth in infrastructure, the RBI Governor said that the infrastructure gap still remained large. “According to estimates of NITI Aayog, the country would need around 4.5 trillion dollars for investment in infrastructure by 2030. On financing options for infrastructure, we are just recovering from the consequences of excessive exposure of banks to infrastructure projects. Non-performing assets (NPAs) relating to infrastructure lending by banks has remained at elevated levels. There is clearly a need for diversifying financing options. The setting up of the National Investment and Infrastructure Fund (NIIF) in 2015 is a major strategic policy response in this direction. Promotion of the corporate bond market, securitisation to enhance market-based solutions to the problem of stressed assets, and appropriate pricing and collection of user charges should continue to receive priority in policy attention,” he said.