New index to check ease of doing agri-business

New index to check ease of doing agri-business


  1. The ministry of agriculture is planning to come out with its own index to rank states on ‘ease of doing agri-business’.

Important Facts:

  1. Background: This proposal comes barely two years after NITI Aayog launched the first index to rank states on the basis of marketing and farmer-friendly reforms and India jumped 23 places in the Global Ease of Doing Business ranking of the World Bank.
  2. About Index on ‘ease of doing agri-business’ :
  • It will broadly rank states on six major reform parameters related to the farming sector and have a total score of 100.
  • The six major reform parameters include the following:
  • Marketing reforms (total weight of 25),
  • Reducing the cost of inputs (20),
  • Governance and land reforms (20)
  • Risk mitigation (15)
  • Increasing production and productivity (10)
  • Investment in agriculture (10).
  • In marketing reforms which has the highest weight of 25 the following factors have been included: adoption by states of the model Agriculture Produce and Livestock Marketing (Promotion and Facilitation) Act – 2017, the establishment of electronic national agriculture market network, development of rural haats and post-harvesting infrastructure.
  • The agriculture ministry may consider rewarding high performing states (both in absolute and incremental terms) by linking them to the allocation of flexi-funds available under various flagship schemes.
  1. Comparison with NITI Aayog Agricultural Marketing and Farm Friendly Reforms Index:
  • NITI Aayog Index, ranked states on three broad parameters that included agricultural market reforms, land lease reforms and reforms related to forestry on private land, felling and transit of trees.
  • In the initial edition of that Index in 2016, Maharashtra stood first in the rankings, followed by Gujarat.
  • However the proposed index has a wider ambit, but the focus is still on reforms, with marketing reforms (25%) and governance and land reforms (20%) carrying almost half of the weight of the parameters in its scoring system.
  1. Another major parameter on which States will be rated on is their success in reducing the cost of farm inputs (20%) by distributing soil health cards and encouraging organic farming and micro-irrigation.
  2. Risk mitigation measures such as crop and livestock insurance carry a 15% weightage, while increased productivity and investment in agriculture carry a 10% weight each.
  3. An online dashboard to track State performances will be developed by the year-end, according to the concept note’s timelines.
  4. As and when reforms are undertaken, the same would be incorporated into the index with appropriate weights.
  5. The respective division of the ministry of agriculture will evaluate the performance information furnished by the state governments to verify their accuracy.
  6. Significance:
  • As agriculture is a State subject, the index is aimed to develop a competitive spirit between the States.
  • Moreover the committee set up to recommend strategies to double farmers income by 2022 had also suggested that States should be ranked based on their reform and governance record.
  • The basic idea is to incentivize the states for various reform measures undertaken by them over the years and see how efficient they have been in implementing government programmes.
  1. Critics viewpoint:
  • Critics say that unless basic issues related to farming are addressed in totality, such measures won’t help farmers.
  • The moot point is that farmers aren’t getting the price for their produce and a fresh ranking will not solve that.
  • The parameters of such rankings also need to be carefully set.

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