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Day 25 – Q 3. The government’s decision to introduce long-pending agricultural reforms will help in better price discovery for farmers. Comment. 

  • IASbaba
  • July 8, 2020
  • 0
GS 3, Indian Economy, TLP-UPSC Mains Answer Writing
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3. The government’s decision to introduce long-pending agricultural reforms will help in better price discovery for farmers. Comment. 

लंबे समय से अनिर्णीत कृषि सुधारों को लागू करने के सरकार के फैसले से किसानों के लिए बेहतर कीमत की प्राप्ति में मदद मिलेगी। टिप्पणी करें।

Demand of the question:

It expects student to write about the need to introduce long pending agricultural reforms & what kind of reforms are introduced. It also expects student to analyse both aspects of whether the introduced new reforms will help in better price discovery for farmers or not.

Introduction:

In order to revive the Indian economy, the Central government has announced the Atma Nirbhar Bharat Abhiyan. Agricultural reforms are part of the third tranche of the economic package announced under Atmanirbhar Bharat Abhiyan to counter Covid-19 pandemic which may yield better income for farmer in coming days.

Body: 

The central government introduced major agricultural market reforms through three ordinances: 

  • The Essential Commodities (Amendment) Ordinance 2020. (ECA)
  •  The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020.(FPTC)
  •  The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020.

Need to Introduce these  Reform:

  • India has surplus production in most agri-commodities but farmers have been unable to get better prices due to lack of investment in necessary infrastructure such as Ware house, Cold Storage etc.
  • The imposition of the curbs on stocking of farm produce and regulation of the prices of commodities, etc. under Essential Commodities Act (ECA) are some of factors responsible for less interest of entrepreneurs hence, less investment in the farm sector.
  • There are restrictions for farmers in selling agri-produce outside the notified Agricultural Produce Market Committee (APMC) which in turn put less money in the hands of farmer.
  • The farmers are also restricted to sell the produce only to registered licensees of the State Governments, which restricted farmers option to explore new markets.
  • Further, barriers exist in free flow of agriculture produce between various States owing to the prevalence of various APMC legislations enacted by the State Governments.

A window of opportunity amidst eclipse of COVID-19:

  • The amendment to ECA would deregulate the commodities such as cereals, edible oils, oilseeds, pulses, onions and potatoes. It will help to lessen the fears of private investors of excessive regulatory interference in their business operations.
  • Any limits under ECA over these commodities will be imposed only in exceptional circumstances such as war, famine, extraordinary price rise and natural calamity.
  • The freedom to produce, hold, move, distribute and supply will lead to harnessing economies of scale and attract private sector/foreign direct investment into the agriculture sector.
  • It will help drive up investment in cold storages and modernization of the food supply chain.
  • An amendment to FPTC will create an ecosystem where the farmers and traders would enjoy freedom of choice of sale and purchase of agri-produce.
  • It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State agricultural produce marketing legislations.
  • It empowers farmers for engaging with processors, wholesalers, aggregators, large retailers, exporters etc. and thus eliminating intermediaries resulting in full realization of price.
  • Farmers have been provided adequate protection. Sale, lease or mortgage of farmers’ land is totally prohibited and farmers’ land is also protected against any recovery.
  • It also provides an effective dispute resolution mechanism with clear timelines for redress.
  • These reforms are expected to build necessary agrarian infrastructure in the country which will lead to build “One India, One Agriculture Market”

Though these kind of reforms are the most awaited reforms since Independence. There are some pitfalls too as  pointed out by some experts:

  • These reforms have kept away the state from its limited revenue resources. 
  • Clearly, the move is to promote free trade under the slogan of one nation one market.
  • The peasantry at large will be at the mercy of the Agri Business Corporations since there will not be any arrangements for price support and price stabilisation for crops. 

Despite the above mentioned pitfalls, many agriculture experts opined:

  • The country got Independence in 1947 but farmers are going to get freedom after the promulgation of this ordinance.
  • These steps have been advocated by agriculture economist Ashok Gulati for decades and he welcomed the steps. “What the government is doing with these reforms is that, it is creating alternative channels for farmers to sell their produce. So, they will have more choices”. Which will yield better prices discovery for farmers.

Conclusion:

These newly introduced  reforms are the most awaited reforms since the Independence of India in 1947. It has opened up a new window to improve the farmers income by  better price realisation. In the long run it will help India to  achieve its  target to double farmers income by 2022.

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