Urban Mirror Correspondent
New Delhi, December 26: The Lok Gathbandhan Party (LGP) today said that demonetisation and the Goods and Services Tax (GST) which has disrupted the economic activities in informal sector, has left a lasting effect on food prices in farm sector in the country. The LGP said that the NDA government’s announcement of doubling farmers income has thus proved a mirage.
The spokesman of the party said here on Wednesday that even after lapse of four-and half-year tenure of the NDA government farm distress has emerged as the biggest problem which the government has failed to solve. The spokesman said the NDA government’s claim of India emerging as fastest growing economy has received a major jolt because of agriculture sector crisis as the solution in near future appeared to be far-fetched. The spokesman said the farm sector problem appeared to be rooted in prices and not production growth. The spokesman said according to media report the Gross Value Added (GVA) in agriculture has grown at more than 3% since 2016-17. The 2014-15 and 2015-16 growth rates were lower because these were drought years. Yet the farm distress narrative has gained in momentum.
The spokesman said the reason becomes clear when we look at food inflation statistics — it has continuously declined from double digit figures and has entered negative territory in the recent period. Put otherwise, food prices have fallen. However a healthy production growth accompanied by a crash in prices has dealt a body blow to the viability of agriculture as an economic activity, the spokesman said and added reports further indicated that far from incomes doubling, farmers are finding it more and more difficult to even recover their cost of production.
A multitude of factors has contributed to this situation, the spokesman said and added India adopted inflation targeting as the anchor of its monetary policy. Food items are the biggest component of the Consumer Price Index basket. Global food prices have been declining. Demonetisation and the Goods and Service Tax disrupted economic activity in the informal sector, which seems to have left a lasting effect on food prices. The spokesman said the NDA government’s efforts to do damage control by doubling minimum support prices has however failed to arrest deflation in farm sector and thus the implications of the viability crisis in agriculture are far from over.
