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