GOVERNANCE/ ECONOMY/ AGRICULTURE
Topic: General Studies 2 & 3:
- Government policies and interventions for development in agriculture sector
- Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
A 1991 moment for agriculture
Context: In the wake of COVID-19 induced crisis, Union government announced set of reforms aimed at farm sector.
Did you know?
- 45 per cent of India’s labour force (agricultural) generates only 14 per cent of GDP
- India is the largest exporter of rice in the world and the second-largest producer of both wheat and rice, after China
- The project to double farmers’ incomes by 2022 and the programme to complete 99 irrigation projects by 2019, have had a success rate of less than 50 per cent.
What were the major components of agricultural package announced?
1. Agri-Infrastructure: ₹1-lakh crore fund to finance agriculture infrastructure projects at the farm gate and produce aggregation points
- It will ensure creation of adequate cold-storage facilities
- This would prevent wastage of agri-produce, especially in perishables
2. Effective Fund delivery: These funds are channelled through agricultural cooperatives, farmer producer organisations, rural entrepreneurs and start-ups
- This ensures that benefit & responsibility of fund utilization lies with principal beneficiaries (farmers)
3. Formalisation: A ₹10,000 crore scheme to promote the formalisation of micro food enterprises
- It will assist unorganised enterprises in scaling up food safety standards to earn the products certification and build brand value
4.Amending the Essential Commodities Act (ECA) of 1955
- The legislation helped government cracks down on hoarders and black-marketeers of such commodities (by putting stock limits) to ensure normal supply of goods.
- It is a scarcity era legislation enacted when India was facing famines and droughts, however India is a surplus producer today.
- This law has been abused multiple times which has stifled private investment in agriculture and stunted agri-exports
- The amendments proposed allows for deregulating cereals, pulses, oilseeds, edible oils, onions and potato, encouraging greater participation by private players in the agricultural sector.
5. Agri-Market reforms: Bringing a Central legislation to allow farmers to sell their produce to anyone, outside the APMC mandi yard and having barrier-free inter-state trade.
- It will bring greater competition amongst buyers, lower the mandi fee and commission fee, benefitting both farmers and consumers
- This would provide enhanced marketing freedom for farmers and enable better price realisation.
- Allowing for free inter-state trade could lead to better spatial integration of prices.
- Finally, India will have one common market for agri-produce.
6.Creating a legal framework for contract farming
- It will help farmers take cropping decisions based on forward prices
- This will enable farmers to engage with processors, aggregators, large retailers thus reducing the dependency on APMC monopolies
- The package may be more beneficial in the longer term than providing any immediate relief from the lockdown-caused distress in the rural areas.
- Total deregulation for foodgrains has the risk of future inflationary food price spikes
- Agri-market reforms means privileging market forces without necessarily safeguarding food security.
- Building farmer producer organisations (FPOs), based on local commodity interests, is a necessity for empowerment of farmers
Connecting the dots:
- Critically analyse the 1991 economic reforms
- Second Green revolution