High Level Group on Agricultural Exports : Finance Commission

• 01 Aug 2020

Why in News

Recently, the High Level Group (HLEG) on Agricultural Exports set up by the Fifteenth Finance Commission has submitted its report to the Commission.

• The HLEG was set up to recommend measurable performance incentives for states to encourage agricultural exports and to promote crops to enable high import substitution.

Finance Commission

• The Finance Commission is a constitutional body, that determines the method and formula for distributing the tax proceeds between the Centre and states, and among the states as per the constitutional arrangement and present requirements.
• Under Article 280 of the Constitution, the President of India is required to constitute a Finance Commission at an interval of five years or earlier.
• The 15^th Finance Commission was constituted by the President of India in November 2017, under the chairmanship of NK Singh. Its recommendations will cover a period of five years from April 2020 to March 2025.
  
  • Recently, the Ministry of Finance has released a part of grants-in-aid as a part of the Tied Grant as recommended by the 15^th Finance Commission (FC) for the Financial Year (FY) 2020-2021.

Key Points

• Purpose to Constitute HLEG:
  
  • To assess export & import substitution opportunities for Indian agricultural products (commodities, semi-processed, and processed) in the changing international trade scenario and suggest ways to step up exports sustainably and reduce import dependence.
  • To recommend strategies and measures to increase farm productivity, enable higher value addition, ensure waste reduction, strengthen logistics infrastructure etc. related to Indian agriculture, to improve the sector's global competitiveness.
  • To identify the impediments for private sector investments along the agricultural value chain and suggest policy measures and reforms that would help attract the required investments.
  • To suggest appropriate performance-based incentives to the state governments for the period 2021-22 to 2025-26, to accelerate reforms in the agriculture sector as well as implement other policy measures in this regard.
• Recommendations:
  
  • Crop Value Chains:
    
    • It emphasises to focus on 22 crop value chains with a demand driven approach.
    • The demand driven approach refers to a development strategy where the people themselves are expected to take the initiative and the responsibility for improving supply situation rather than being passive recipients of the Government services.
    • It also suggests to solve Value Chain Clusters (VCC) holistically with focus on value addition.
  • State-led Export Plan:
    
    • It is a business plan for a crop value chain cluster, that will lay out the opportunity, initiatives and investment required to meet the desired value chain export aspiration.
    • These plans will be action-oriented, time-bound and outcome-focused.
    • Such plans should be collaboratively prepared with private sector players and Commodity Boards presenting participation of all stakeholders.
  • Participation of Private Sector:
    
    • The private sector players need to play a pivotal role in ensuring demand orientation and focus on value addition.
    • It also needs to ensure project plans are feasible, robust, implementable and appropriately funded; providing funds for technology based on business cases and for creating urgency and discipline for project implementation.
  • Central Government’s Role:
    
    • The Central government should act as an enabler.
    • Thus, robust institutional mechanisms need to be enforced to fund and support implementation.
• India’s Estimated Agricultural Export Potential:
  
  • India’s agricultural export has the potential to grow from USD 40 billion to USD 70 billion in a few years.
  • The estimated investment in agricultural export could be to the tune of USD 8-10 billion across inputs, infrastructure, processing and demand enablers.
  • Additional exports are likely to create an estimated 7-10 million jobs.
  • It will also lead to higher farm productivity and farmer income.

Source:PIB