Food Grain Policies in India and their Implications for Stocks and Fiscal Costs
- We analyse current and possible future reforms of the Indian food policies for the most important staple grains, wheat and rice, within a two-commodity dynamic partial equilibrium model with stochastic shocks. The model is empirically grounded and reproduces past values well. It uses a new reduced-form approach to capture private storage dynamics. We evaluate the implementation of the National Food Security Act (NFSA) under several policy measures with the current regime as well as two scenarios with a regime change - implementation of cash transfers and deficiency payments. Implications for market fundamentals and fiscal costs are simulated in the medium term - until 2020/21. The NFSA puts a high pressure on fiscal costs and public stocks. Relying on imports with low support prices results in low fiscal costs and stable, but higher domestic and international prices, and a high risk of zero stocks. A policy strategy to manipulate procurement prices in order to maintain public stocks close to the norms leads to slightly higher fiscalWe analyse current and possible future reforms of the Indian food policies for the most important staple grains, wheat and rice, within a two-commodity dynamic partial equilibrium model with stochastic shocks. The model is empirically grounded and reproduces past values well. It uses a new reduced-form approach to capture private storage dynamics. We evaluate the implementation of the National Food Security Act (NFSA) under several policy measures with the current regime as well as two scenarios with a regime change - implementation of cash transfers and deficiency payments. Implications for market fundamentals and fiscal costs are simulated in the medium term - until 2020/21. The NFSA puts a high pressure on fiscal costs and public stocks. Relying on imports with low support prices results in low fiscal costs and stable, but higher domestic and international prices, and a high risk of zero stocks. A policy strategy to manipulate procurement prices in order to maintain public stocks close to the norms leads to slightly higher fiscal costs with lower, but more volatile prices. The highest domestic price volatility occurs under a strategy which uses export bans in order to maintain sufficient public stocks. A cash-based regime can bring considerable savings and curb fiscal costs, particularly if targeted to the poor, and would leave sufficient stocks due to higher private stocks.…
Author details: | Marta KozickaORCiD, Matthias KalkuhlORCiDGND, Jan Brockhaus |
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DOI: | https://doi.org/10.1111/1477-9552.12176 |
ISSN: | 0021-857X |
ISSN: | 1477-9552 |
Title of parent work (English): | Journal of Agricultural Economics |
Subtitle (English): | a Dynamic Partial Equilibrium Analysis |
Publisher: | Wiley-Blackwell |
Place of publishing: | Hoboken |
Publication type: | Article |
Language: | English |
Date of first publication: | 2017/06/27 |
Publication year: | 2017 |
Release date: | 2022/07/01 |
Tag: | Fiscal costs; India; NFSA; food grain policies; grain storage; reforms |
Volume: | 68 |
Issue: | 1 |
Number of pages: | 25 |
First page: | 98 |
Last Page: | 122 |
Organizational units: | Mathematisch-Naturwissenschaftliche Fakultät / Institut für Geowissenschaften |
DDC classification: | 5 Naturwissenschaften und Mathematik / 55 Geowissenschaften, Geologie / 550 Geowissenschaften |
Peer review: | Referiert |