New Delhi: The Modi government announced major reforms in the agriculture sector, including freeing farmers from mandi monopoly, as it continued to unveil the contours of its Rs 20 lakh crore lockdown relief package.
At a press conference Friday, the third in as many days with regard to the package, Finance Minister Nirmala Sitharaman said the government will amend the Essential Commodities Act to exclude cereals, edible oils, oil seeds, pulses, onions and potato.
The government, she added, will also bring in a central law that will allow farmers to directly sell their produce to buyers of their choice, and even undertake inter-state trade.
These steps will enable price realisation for Indian farmers, Sitharaman said. “The focus of the announcements so far has been more about empowerment than entitlement,” she added.
Amendments to Essential Commodities Act
Stock limits are enforced by the government to check hoarding and price rise of essential commodities.
The government’s proposed amendments to the Essential Commodities Act will ensure stock limits are not imposed on any of the aforementioned commodities except in circumstances like national calamities or a huge surge in prices.
For instance, under the proposed framework, the stock limit will only become applicable in the event of a 100 per cent price increase for horticulture produce like onion and 50 per cent for non-perishable commodities like edible oil.
Stock limits will also not apply to food processors or value chain firms, subject to their installed capacity, and on exporters, subject to their export demand.
This reform will remove a major hurdle for farmers and the food supply chain industry. The amendment was also suggested in the Economic Survey 2020.
Doing away with mandi monopoly
The government has also decided to free farmers from Agricultural Produce Market Committee (APMC) monopoly after a number of states did the same in recent days through ordinances.
Farmers can currently only sell their produce to traders who have a mandi licence under the APMC Act.
Pointing out that no such restrictions are placed on industrial produce, Sitharaman said the proposed central law will look to empower farmers to sell their produce at attractive prices while facilitating barrier-free inter-state trade.
The central law will also provide a framework for e-trading of agricultural produce.
In addition, the government said it will bring in a “legal framework” that will help farmers predict the prices of crops at the time of sowing, and engage with processors, aggregators, large retailers and exporters.
The framework will also help mitigate risks for farmers and standardise quality in the agriculture sector, Sitharaman added.
A Rs 10,000 crore boost to agri infrastructure
Other measures for farmers include a Rs 1 lakh crore agri infrastructure fund, to be created by the National bank for agriculture and rural development (NABARD), to bolster infrastructure.
This will help in the creation of adequate cold supply chains and post-harvest management infrastructure, Sitharaman said.
The government also announced a fund of Rs 10,000 crore for setting up micro food enterprises on a “cluster approach”.
The reforms announced Friday have been long-pending. Although the government said it will help boost farmer earnings, they are expected to provide little immediate assistance to farmers who have seen their incomes fall on account of the COVID-19 pandemic and the subsequent lockdown.