Monday 26 October 2020

Indian farmers freed 73 years after India’s political freedom

Farmers, despite being producers, have not been allowed to operate as businessmen, pushing them to subsistence and the economy to drainage

In a big reform initiative, the Narendra Modi government today decided to throw open the doors of national markets for farmers, allowing them to sell their produce “wherever” and to “whoever” without any restrictions on selling only to licensees in Agricultural Produce Market Committees (APMCs) or mandis.

Finance Minister Nirmala Sitharaman today announced administrative reform initiatives for the agriculture sector as part of the third tranche of the prime minister’s economic booster on 15 May. She said that a central law would be enacted to provide marketing choices to farmers. This will, she said, help them in better price realisation for their produce.

Under the provisions of the Agricultural Produce Market Committee (APMC) Act, farmers were so far forced to sell whatever they produced only in designated mandis at prices that were often regulated — many times lower than the prevailing market price. The odd law restricted earnings of the farmers and curbed their ability to take their crops for further processing or exports.

Importantly, this also meant that the farmer, despite being a manufacturer, could not operate as a businessman, thus needing the government to bail him out time and again. Politicians of all hues would demand, while in opposition, higher minimum support prices (MSP) and loan waivers to debt-ridden farmers, and grant both when in power, thus damaging India’s banking system too.

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While several states agreed they must abrogate or amend the APMC Act and abolish the mandi system, none actually did.

Sitharaman said that agriculture being in the concurrent list, the union government would make a law so that farmers have enough choices to sell produce at attractive prices. The law will, she said, also provide for barrier-free inter-state trade for farmers and facilitate a framework for e-trading of agriculture produce.

Such restriction on sale is not there for any industrial production, she said, explaining the need for the new law.

The provision for inter-state freedom for farmers to sell their produce is expected to help them identify the right market for a given crop at a particular point of time.

The forward linkage for farmers and their involvement in the supply chain would have a bearing on the price of agricultural produce, experts said.

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