‘Atmanirbhar Bharat’ initiatives, an attempt to free the farmer

| Updated on May 18, 2020 Published on May 17, 2020

ECA dilution and a new Central law to replace APMCs are good moves, but implementation is key

The third tranche of the Atmanirbhar Bharat package announced by the Finance Minister contained a fairly predictable set of measures promising more credit to farmers, investments in agri-infrastructure and promoting ancillary activities to supplement agricultural income. But two key announcements in the package have the potential to substantially transform Indian agriculture, if followed through. One is the promise of a Central law to provide more choices to the farmer beyond the Agricultural Produce Marketing Committee (APMC) mandis. The other is the proposal to amend the Essential Commodities Act (ECA) to ‘deregulate’ commodities such as cereals, edible oils, oilseeds, pulses, onions and potatoes. If the government manages to walk the talk, these measures can go a long way in improving the terms of trade for farmers and allowing them the freedom of choice they have been long denied.

APMC Acts that force farmers to sell their produce only to licensed agents have been a key hindrance to the operation of free markets in agriculture, restricting the farmer’s ability to access the most lucrative markets and impeding efficient price discovery. The NDA regime has so far tried to fix this problem by pressuring States to repeal their APMC Acts and getting farmers onboard e-NAM. But this has proved less than effective, with many States (given the rent-seeking opportunities in the APMC structure) either dragging their feet or taking half-hearted stabs at it. In States that have attempted the repeal, farmers have been left without a well-structured alternative to market their produce. The promise of non-APMC alternatives is a welcome step to dismantle the APMC monopoly, but whether this translates into a better deal for farmers will depend on implementation. For this to succeed, credit and transport services presently provided by traditional intermediaries will need to be replicated and solutions found for farmers to aggregate produce and exercise collective bargaining power. The Centre will also need to refrain from ad-hoc market interventions such as trade curbs and buffer stock releases, whenever consumer interests are threatened.

The ECA is the vestige of an era where agri-commodities were subject to perpetual shortages and any attempt to dilute it is welcome in this era of surpluses. Draconian rules that allow the government to declare arbitrary products as ‘essential’, fix selling prices and prosecute players seen to be hoarding, have proved a big hurdle to the development of efficient go-to-market infrastructure for farm produce. But given the sensitivity of political fortunes to inflation in commodities such as pulses and onions, it remains to be seen if the Centre refrains from intervening when crisis strikes. It is also a moot point why it has not gone the whole hog to repeal the ECA instead of merely proposing tweaks to it. Long-term reforms apart, solutions also need to be found to the farmer’s more immediate problem of a bumper rabi crop, which will need to be sold into markets hit hard by demand destruction and lack of producer pricing power.

Published on May 17, 2020

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.