KPMG says 'lot of mis-communication' on farm reforms

Amid farmer protests, KPMG says 'lot of mis-communication' on farm reforms

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Amid protests by farmers on the outskirts of Delhi, a global consultancy firm on Friday said there is “lot of miscommunication” on the recently introduced agricultural reforms.

There is a need to club the reform measures with existing schemes like PM Formalisation of Micro Food Processing Enterprises (PMFME) and Farmer Producer Organisation to create a "new perspective", KPMG said.

Irked with the passage of three laws related to the farm sector, agriculturists have been protesting at the Delhi border for weeks now, seeking complete repeal of the laws.

Specific concerns include the non-inclusion of minimum support price (MSP) in the laws and also the likelihood of deep-pocketed corporate houses entering the sector. The government has been holding parleys with the organisation but has not been able to achieve any success.

"There is a lot of miscommunication on the impact of recent agricultural reforms,” the consultancy firm said in a report on the impact of COVID-19 pandemic on potential income and employment.

It said the three reforms should be clubbed with other reform measures like the PMFME and FPO schemes to “create a new perspective on the benefits that can accrue to the farmer groups”.

Seeking details on the Rs 1.5 lakh crore investment, it said clarity on the same can help attract additional funds in the farm sector from the private sector and FPOs and added that a Rs 1 lakh crore investment can result in a Rs 2.53 lakh crore expansion in output and create 10.5 million-person year employment across sectors.

Meanwhile, it said the pandemic will result in a 9.8 per cent contraction in the economy under the baseline scenario, and there is a need for the government to up its expenditure to give a push to the demand process.

Even with a V-shaped recovery, the economy will likely contract by 1.1 per cent during the ongoing fiscal year, which can widen to 13.6 per cent in case of a L-shaped recovery.

It can be noted that the government and the RBI have introduced a slew of measures to aid the economy in the pandemic and the actual additional spends by the exchequer is under 3 per cent of GDP.

In its report, KPMG, a consultancy firm, said the existing Rs 20.9 lakh crore stimulus package focuses on improving liquidity, providing collateral free loans to small businesses and has introduced some reforms.

"While these measures to an extent address the supply side problems, the coronavirus pandemic requires higher government expenditure and investment to push the economy back on growth trajectory by directly increasing final demand and boosting both consumer and business sentiments," the report said.