RE: ATTN : SHRI NARENDRABHAI MODIJI / SHRI N S TOMARJI

 Inder,

 

You have a very valid point

 

hcp

 

From: inder@gmail.com [mailto:indrajitsethi@gmail.com]
Sent: Wednesday, December 9, 2020 8:27 PM
To: Hemen Parekh
Subject: Re: ATTN : SHRI NARENDRABHAI MODIJI / SHRI N S TOMARJI

 

Dear Sir,

 

Knowing the mentality of Indian politicians, this may not work.

 

They will argue that the farmer having the least productivity, deserves the maximum incentives as his earnings can't support his farming costs and family.

 

Strange but true.

 

Thanks and regards,

 

INDER

 

 

 

 

 

On Wed, Dec 9, 2020 at 1:22 AM Hemen Parekh <hcp@recruitguru.com> wrote:

Production Linked Incentive for Rice ( Paddy )

 

 

Dear Shri Tomarji,

 

In my following e mail of yesterday, I suggested introduction of a Production Linked  Incentive ( PLI ) scheme for agricultural crops ( in addition to continuation of existing MSP scheme )

 

https://myblogepage.blogspot.com/2020/12/how-about-introducing-pli-for.html

 

 

Here is a Conceptual Frame-work :

 

Ø  Through the proposed INCENTIVE FORMULA , we want to INCENTIVIZE all farmers to implement latest technology and DOUBLE the “ Ave Yield ( Kg / Hactare ) “

 

Ø  In such a scheme, we want MORE INCENTIVE for marginal / small farm-holdings and LESS INCENTIVE for medium / large farm-holdings

 

 

Ø  For Rice , ( Paddy – A grade ) ( taken for demonstration purpose ) :

#    Current MSP is Rs 1888 / quintal ( Rs 18.88 / Kg )

       #    Average Output / Hactare is >  4679 Kg ( World Ave )  and  > 2638 Kg ( India Ave )

================================================================================

                                                    INCENTIVE MATRIX

=================================================================================

 

Incentive Amount in Rs / Kg ( for incremental output over India Ave of 2638 Kg / Hactare, is shown below (  There will be NIL incentive for a farm whose yield is below the India average )

 

Type of Farm	Farm Size in Hectare	No of Farm Holdings ( Mill. )	2700 kg	2900 kg	3300 kg	3700 kg	4100 kg	4500 kg	4900 kg
Marginal	Below 1	71.12	-	13	14	15	16	17	18
Small	1 to 2	21.64	-	8	9	10	11	12	13
Small - Medium	2 to 4	14.26	-	3	4	5	6	7	8
Medium	4 to 10	7.09	-	2	3	4	5	6	7
Large	Above 10	24.16	-	1	2	3	4	5	6
Total		138.27

 

( source : Agriculture Census )

 

Implication for a Marginal Farmer who manages to raise his yield from India Ave ( 2638 Kg / hectare ) , all the way upto ( say ) 4900 Kg / hectare [ see first row of this table ] :

 

( A ) for the BASE figure ( 2638 Kg )  >  NIL incentive

 

( B ) for next 200 Kg ( reaching 2900 Kg ) > Rs 13 x 200 = Rs 2600 / -

( C ) for next 400 Kg ( reaching 3300 Kg )  > Rs 14 x 400 = Rs 5600 / -

 

( D ) for next 400 Kg ( reaching 3700 Kg ) >  Rs 15 x 400 = Rs 6000 / -

( F ) for next 400 kg ( reaching 4100 Kg )  >  Rs 16 x 400 = Rs 6400 / -

 

( G ) for next 400 Kg ( reaching 4500 Kg ) >  Rs 17 x 400 = Rs 6800 / -

 

( H ) for next 400 Kg ( exceed World Ave ) > Rs 18 x 400 = Rs 7200 / -

 

 

Total …………………………………………………………… Rs 34,600 / -

 

 

In the topmost slab ( 4900 kg / hectare ), a farmer gets :

 

Ø  Rs 18.88 / kg by way of MSP,  and

Ø  Rs 18.00 / Kg by way of PLI

      Hence DOUBLING of income !

 

===================================================================

 

This is similar to our Personal Income Tax system, where the “ Tax Rate “ goes on increasing with each higher slab of income ( except , here it works in reverse considering that the farm income is TAX FREE  ! )

 

Of course, this is merely a CONCEPTUAL FRAME-WORK for getting the farmers to quickly adopt latest technologies in order to increase farm yield in line with the rest of the world

 

This incentive scheme will eliminate all resistance to introduction of technology . In fact, this will make the farmers to pro-actively engage with various government “ Agricultural Research “ Agencies for help / assistance

 

To sell this idea [ to farm experts and to general public ] , Government should carefully calculate and widely publish, how “ Per Kg “ Cost of Production would dramatically FALL , due to “ Economies of Scale ( factory-like mass-production ) “

And when there is huge decrease in per kg “ Cost of Production “ ,  that make our agricultural produce “ price competitive “ with international prices and give a huge boost to Agri-Exports !

 

I assume PLI will not attract any sanctions from WTO as any kind of “Farm Subsidy “ – which USA – EU etc are giving to their farmers

 

This incentive scheme will spur “ Farm Mechanization “and boost use of Tractors – Harvesters – Combines etc ( a big boost to the Farm Machinery Industry, without having to subsidize its production )

 

 

Dear Shri Tomarji,

 

During your talks with the farmer leaders this afternoon , you may want to ask them what they think about such a scheme , which may be tried out with just ONE CROP and just ONE STATE , for knowing its results

 

If successful, it can be  extended all over India for that ONE CROP and subsequently to all 23 crops covered by MSP

 

As an alternative , it could be considered for NON-MSP crops to begin with before extending to MSP crops

 

If everyone is happy with the results of this scheme , then after 5 years of successful operations , it could take the form of a FARM INCENTIVES ACT , with in-built provisions for modifying the OUTPUT NORMS ( per hectare ) from time to time

 

Wishing you all luck 

 

 

With regards,

 

Hemen Parekh / hcp@RcruitGuru.com / 09 Dec 2020