JOIN USThe best highlight of the package for agriculture announced by Union Finance Minister Nirmala Sitharaman is the decision to liberalise agricultural trade and marketing by creating a legal framework and mechanisms to give the farmer freedom and control over his produce.
The existing restrictions on sale of agricultural commodities and the inter-state barriers in trade are to be done away with, and the idea of “one nation, one market’’ will in effect be extended to agriculture. Agricultural Produce Marketing Committees (APMCs) control the trade currently, and farmers have to sell their produce there. Once the new legal framework is in place, they will be free to sell their produce to anyone, anywhere in India, and not to just one licensee.
That will empower the farmer and help him to get the best price for his produce on the best terms. The APMC system was originally meant to protect the farmer, but over time, it became a constraint. The licensed traders often formed a cartel and deprived the farmers of the right prices. These prices multiplied through the intermediaries in the trade before reaching the consumer. Reforming this system has been a longstanding demand and the government has done well to initiate it now. It might mean to agricultural trade what the Green Revolution meant to production and is an important liberalisation measure in the 1991 tradition.
An enabling central law will have to be made for this. The Essential Commodities Act, 1955, will be amended to enable farmers to realise better prices by removing the provisions for stock limit, except in rare circumstances. It is also intended to attract investments to farming and to make it more competitive. The Essential Commodities Act was enacted at a time of shortages. It is a constraint when production has expanded and the country is the leading producer of many agricultural commodities in the world.
The government has also announced packages ranging from Rs 1 lakh crore to build farm infrastructure to varied allocations for boosting local products, conducting vaccination of livestock, promoting herbal cultivation, etc. The proposals are intended to give relief to different segments of farming and to help many sections of farmers. But economic impulses take time to course through agriculture and many initiatives do not produce immediate results, mainly because of the nature of agriculture and the processes and activities associated with it.
Inefficiency in implementation may be another factor. So, the government’s package does not offer any immediate relief to the farmer who is in distress now. The Centre will do well to offer some urgent relief measures.