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
Challenges ahead
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
