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Home / IAS Preparation / Arvind Subramaniam Committee

Arvind Subramanian Committee - Economy UPSC Notes!

Last Updated on Jul 21, 2022
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Arvind Subramanian is an economist and former Chief Economic Advisor to the Government of India. To address the lack of pulses in India, the Arvind Subramanian Committee is a high-level body led by the Chief Economic Adviser Arvind Subramanian. He also advocated eliminating the 1% additional tax on interstate sales and replacing it with a GST rate of 17–18% that is revenue neutral. Arvind Subramanian Committe is important for UPSC IAS exam as it consists of recommendations on pulses and GST sector in india. It covers a significant part of GS paper 3 of UPSC mains syllabus.

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Recent Update

In 2022, a lecture he recently gave at the Indira Gandhi Institute of Development Research (IGIDR), Mumbai, Dr. Arvind Subramanian, cautioned against over-optimism on economic recovery on the grounds that India’s national income accounts rest on shaky legs and, even on their basis, the economy has barely recovered to the pre-pandemic level. To his credit, he stated that strong tax growth is a hopeful sign of potential economic vigour.

  • No matter how justified Dr. Subramanian’s displeasure may be, the most recent trends in the Indian economy are unaffected by the new series of GDP data with base 2011–12.
  • The rates of nominal GDP growth were comparable when calculating national income using the old and new methods.
  • Different estimates of real growth were produced as a result of variations in the inflation measures used to deflate nominal data in order to generate real data.
  • Thus, even if the more technical issues pertaining to the methodological disagreement are not resolved, it is still feasible to overstate how misleading the new GDP series is.
  • Now, Dr. Subramanian places a lot of emphasis on high-frequency statistics to support his assertions about an inflated GDP.
  • The same high-frequency statistics now indicate a substantial comeback.

Study in detail about Gross Domestic Product here!

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Background on Health of the Pulse Sector
  • Based on the Consumer Price Index (CPI), the price increase for pulses has decreased from a high of 46% in December 2015 to 0.2% in November this year.
  • As a result of the faster reduction in the price of pulses, the overall rate of food inflation has decreased from 6% to 2%.
  • For the time being, it appears that the issue of high pulse prices, which has persisted for the past few years, has subsided.

Arvind Subramanian Committee & their Recommendations

Arvind Subramanian Committee is a high-level body led by the Chief Economic Adviser Arvind Subramanian. He also advocated eliminating the 1% additional tax on interstate sales and replacing it with a GST rate of 17–18% that is revenue neutral. The recommendations of Arvind Subramanian Committee are as follows:

  • To secure the purchase of kharif pulses at the declared MSP for this season, the government procurement apparatus should be in high gear.
  • A High Level Committee made up of the Ministers of Finance, Agriculture, and Consumer Affairs as well as the Principal Secretary to the PM should be established to ensure efficient procurement.
  • Weekly reports from the field should be made by the procurement agencies, together with actual procurement verification.
  • Create a stock of 2 million tonnes of pulses with specific goals for tur (3.5 lakh tonnes) and urad (2 lakh tonnes).
  • These should be gradually but opportunistically built up by purchasing during times of low pricing, such as the current year.
  • Declare MSPs of Rs. 60/kg for both urad and tur for kharif 2017, and Rs. 40/kg for gramme for rabi 2016. (adjusted for inflation between 2016-17).
  • Other pulses’ minimum support prices should be raised by the same percentage as that determined for tur, urad, and gramme in this study.
  • In 2018, when short-duration kharif tur is ready for commercialization, MSP will be raised to Rs. 70/kg.
  • An effort will be made to provide farmers with production subsidies for growing pulses in irrigated areas, which will be distributed via Direct Benefit Transfer (DBT) and will cost roughly Rs. 10-15 per kilogramme.
  • Instruct CACP to thoroughly review its MSP-setting framework so that risk and social externalities are taken into account.

Study in detail about Minimum Support Price (MSP) here!

Turnaround in the Market
  • The previous two years have seen high market prices for pulses, and the government has made some significant attempts to enhance supply.
  • Farmers have been urged to dedicate more land to pulses in particular by the liberal rise of 9% in the minimum support price (MSP) and announcements of the establishment of a buffer stock of pulses totaling two million tonnes.
  • The benevolent monsoon provided additional assistance, and kharif pulse production skyrocketed.
  • In 2016–17, arhar output climbed by 1.8 million tonnes, an increase of 74%.
  • For urad and moong, the comparable increases were 45% and 32%, respectively.
  • Given the anticipated good rabi crop and a 15% increase in MSP for rabi pulses, this trend is likely to continue.

Study in detail about Goods & services Tax (GST) here!

Reasons for fall in price
  • Prices fell significantly as a result of the increase in output. Several markets saw a dramatic decline in wholesale pricing.
  • These price drops have been made worse by a reduction in demand brought on by the cash crisis following demonetisation.
  • However, the lack of efficient procurement by public bodies is unquestionably the main cause of this price decline.
  • Even though the MSP is announced for around 25 commodities, only wheat and rice are actually purchased.This unbalanced strategy has long been detrimental to pulses.
  • Due to increased pest infestations and decreased irrigation, the output of pulses is increasingly unreliable.
  • Farmers were hesitant to grow pulses since the government didn’t guarantee their purchase.
  • Pulses are primarily farmed on marginal areas and in drier parts of the country for this reason.

Study in detail about Inflation here!

Conclusion

Despite these suggestions and those made by earlier committees, procurement is scarcely efficient, and farmers still have it tough. According to reports, farmers are being turned away from procurement centres for unimportant reasons.

UPSC Prelims Previous Year Questions

Q1. Which of the following factors/policies were affecting the price of rice in India in the recent past? (UPSC 2020)

(1) Minimum Support Price

(2) Government’s trading

(3) Government’s stockpiling

(4) Consumer subsidies

Select the correct answer using the code given below:

(a) 1, 2 and 4 only

(b) 1, 3 and 4 only

(c) 2 and 3 only

(d) 1, 2, 3 and 4

Q2. With reference to pulse production in India, consider the following statements: (UPSC 2020)

  1. Black gram can be cultivated as both kharif and rabi crops.
  2. Green-gram alone accounts for nearly half of pulse production.
  3. In the last three decades, while the production of kharif pulses has increased, the production of rabi pulses has decreased.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 and 3 only

(c) 2 only

(d) 1, 2 and 3

UPSC Mains Previous Year Questions

Q1. Define potential GDP and explain its determinants. What are the factors that have been inhibiting India from realizing its potential GDP? (UPSC 2020)

Q2. Do you agree with the view that steady GDP growth and low inflation have left the Indian economy in good shape? Give reasons in support of your arguments. (UPSC 2019)

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Arvind Subramanian Committee – FAQs

Arvind Subramanian is an economist and former Chief Economic Advisor to the Government of India.

. To address the lack of pulses in India, the Arvind Subramanian Committee is a high-level body led by the Chief Economic Adviser Arvind Subramanian

Prices fell significantly as a result of the increase in output and low demand.

. Arvind Subramanian Committee recommended a revenue-neutral rate of 15-15.5%, with a standard rate of 17-18% which will be levied on most goods and all services.

. As of 2022, V Anantha Nageswaran is the Chief Economic Advisor of India.
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