Page 25 - CII ARTHA_Next Generation_Web

Domestic Trends

To delve deeper into intra-vegetable market linkages, a
separate DY spillover analysis is conducted across key GOVERNMENT REQUIRES A HOLISTIC Fiscal Excellence:
vegetable categories, including potato, onion, tomato, garlic, APPROACH TO ADDRESS STRUCTURAL
ginger, spinach (palak), brinjal, cauliflower, chili, ladyfinger, and INEFFICIENCIES IN AGRI SUPPLY CHAIN
3
gourd .The results are presented in Figure 7. TO MITIGATE VOLATILITY Centre's CII
The total spillover index for all these vegetables is relatively
high at 60.0 per cent, indicating significant price Below are some policy suggestions for addressing food
interdependencies within this category. inflation, particularly the volatility in vegetables: Fiscal

Onion emerges as least receptive in terms of price spillovers, 1. Government should establish a decentralized buffer stock
with an own spillover index of 78.2 per cent. This suggests that mechanism for these volatile commodities by procuring
onion prices are predominantly driven by internal shocks, during peak harvest periods and systematically releasing
rather than external influences from other vegetables. In during lean periods, thereby preventing extreme price Performance
contrast, potato and tomato exhibit substantially lower own fluctuations. Relevant ICAR institutions could prepare a
spillover indices of 38.0 per cent and 33.6 per cent, scientific project report to enhance storability duration.
respectively, suggesting that these commodities are more Further, public private partnerships (PPPs) should be Index Hits
susceptible to shocks from other vegetables. leveraged for decentralized buffer stocking operations.
2. Government should focus on expanding cold storage and
distribution networks at regional and district levels to
Figure 7: Spillovers among Vegetables (per cent) reduce dependence on few production/supply hubs and 20-Year Peak in
prevent distress sales. FPOs and PPPs should be
250.0 strengthened to facilitate aggregation, storage and market
linkages. Climate-controlled vegetable production clusters
200.0 should be developed for tomatoes and other seasonal FY25
vegetables near urban areas, with land allocated to
150.0 interested FPOs, supported by subsidized electricity.
3. To mitigate extreme price fluctuations, government should
100.0 strengthen vegetable processing infrastructure to transform
surplus produce to value-added products. Allocations under
50.0 ‘Agro Processing Clusters’ and ‘Operation Greens’ may be
increased further to expand the processing capacities of Key
TOPs and integrated value chain development projects in
0 relevant clusters. Takeaways
Potato Onion Garlic Ginger Spinach Tomato Brinjal Cauliflower Chilli Ladyfinger Gourd 4. Government should integrate climate resilience into

Own Spillovers Contribution from Others Contribution to Others agricultural practices. A Mission for Climate Adaptation in Evaluating fiscal performance using multiple The central government's efforts to improve
Agriculture should be set up to catalyze collaboration
Source: CII Research between weather forecasting agencies, agri-research indicators rather than a single criterion like the fiscal performance led to the Fiscal Performance
institutions, and value chain players to develop and fiscal deficit to GDP ratio is crucial for Index reaching 70.7 in 2024-25, driven by
disseminate adaptation toolkits to farmers. With the understanding the quality of the Budget, including enhancements in capital expenditure, fiscal deficit,
The high degree of price transmission among vegetables proposed Agri Stack as the foundation, two additional layers revenue sources and expenditure areas. and debt indices, following a record low during
(except onions) suggests that disruption in one vegetable can be introduced as a part of ‘Climate Stack’ under the the peak Covid-19 pandemic year.
market can have cascading effect on other vegetables, Digital Public Infrastructure in Agriculture to strengthen To preclude this problem, CII’s Fiscal
exacerbating price volatility across commodities. Hence, price climate-smart agriculture. Performance Index has been constructed
control measures must extend beyond other commodities that comprising of six broad components at the
drive their volatility. 5. To reduce demand-supply mismatches, government should Centre for the period 2005-06 to 2024-25.
facilitate better market intelligence and demand forecasting
A more holistic approach is required to strengthen supply for farmers. Government should support adoption of
chain linkages and address structural inefficiencies to mitigate market intelligence solutions and reliable early warning
extreme price fluctuations in vegetables. Instead of relying on systems for diseases through targeted incentives
reactive price control measures, there is a need for a proactive sually, the fiscal performance of the government is that we use multiple indicator approach to measure the fiscal
price stabilization mechanism to monitor production trends U evaluated mainly by focusing only on a single criterion discipline of the Centre and the States rather than a single
and market arrivals to enable timely interventions. such as the ‘fiscal deficit to GDP ratio’. This approach is indicator one. Few studies in India have made some attempts in
unsatisfactory, as it does not tell us anything about the quality this direction. Dholakia & Solanki (2001), Dholakia (2005) at
of the Budget – the resources raised, and the expenditure the State-level and Bhide & Panda (2002) at the national level
incurred. In the schema of public finance literature, the sources are the noteworthy ones. Recently Niti Aayog brought out a
from which revenue is raised and the areas on which money is report titled ‘Fiscal Health Index’ (2025) which assessed the
spent are considered more important. Hence, it is important fiscal health of states through construction of an index
3 These vegetable commodities have a share of 75.4% in the overall vegetables basket. capturing performance of states across five major sub-indices.

24 QUARTERLY JOURNAL OF ECONOMICS QUARTERLY JOURNAL OF ECONOMICS 25
APRIL 2025
APRIL 2025