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High Level Group on Agricultural Exports : Finance Commission

  • 01 Aug 2020
  • 5 min read

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 15th 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.

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

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