high-level-group-hleg-on-agricultural-exports-summary

Context: The High Level Group (HLEG) on Agricultural Exports set up by the Fifteenth Finance Commission has submitted its report.

The Terms of Reference of the HLEG: 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.

  • To assess export & import substitution opportunities for Indian agricultural products in the changing international trade scenario.
  • To recommend strategies and measures to increase farm productivity, enable higher value addition, ensure waste reduction, strengthen logistics infrastructure etc. 
  • To identify the impediments for private sector investments along the agricultural value chain and suggest policy measures and reforms.
  • 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.

Major recommendations: 

  1. Demand driven approach: Focus on 22 crop value chains.
  2. Focus on value addition: Solve Value Chain Clusters (VCC) holistically.
  3. Create a State led export plan: With participation from stakeholders.
  4. Role of Private Sector: Should play an anchor role.
  5. Role of Centre: Should be an enabler.
  6. Robust institutional mechanism: To fund and support implementation.

A State-led Export Plan: 

  • Proposed in the report 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.  
  • The success of the State led Export Plan will depend on the following factors-
    • Plans should be collaboratively prepared with private sector players and Commodity Boards.
    • Institutional governance should be promoted across state and centre. 
    • Funding through convergence of existing schemes, Finance Commission allocation and private sector investment.

Private sector to play a pivotal role:

  • In ensuring demand orientation and focus on value addition; 
  • Ensuring 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. 

Potential of India’s agricultural export:

  • To grow from USD 40 billion to USD 70 billion in a few years.
  • Estimated investment in agricultural export could be USD  8-10 billion across inputs, infrastructure, processing and demand enablers.
  • Job creation: Additional exports are likely to create an estimated 7-10 million jobs.
  • Higher farm productivity: It will lead to higher farm productivity and farmer income.

15th Finance Commission:

  • The Fifteenth Finance Commission was constituted on 27 November 2017, under the chairman NK Singh.
  • The Term of Reference of 15th FC:
    • The demand on the resources of the Central Government particularly on account of defence, internal security, infrastructure, railways, climate change, etc. 
    • The demand on the resources of the State Governments, particularly on account of financing socioeconomic development and critical infrastructure, etc.
    • The impact of the GST, including payment of compensation for possible loss of revenues for 5 years, and abolition of a number of cesses ,etc. 
  • New dynamic: The reorganisation of the State of Jammu and Kashmir into two Union Territories - one of Jammu and Kashmir and one of Ladakh - presents a new dynamic. 
  • Formula that decides a State’s share

Weight in 15th FC

Parameters

Weight in 14th FC

15

 (2011 Census)

Population

27.5

(17.5 - 1972, 10 - 2011 Census)

15

Area

15

10

Forest and Ecology

7.5

45

Income Distance

50

12.5

Demographic Performance

-

2.5

Tax Effort

-


Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1642591