Watershed reforms in Indian Agriculture sector

Rohit Vadhwana Tuesday 15th December 2020 08:37 EST

India is a country of farmers and villages. Mahatma Gandhi had said, ‘The soul of India lives in its villages.’ And it is true even today as the census of 2011 shows about 68.84% Indians live in 640,867 villages. Main occupation in villages is Agriculture, providing primary source of employment to over 58% of India’s population.

While the first set of Agricultural reforms, in a way of Green Revolution, has made India self-reliant and exporter of food products, contribution of agriculture in economy is only 4% of GVA, and resultantly there is less return for farmers. This has been one main cause of poverty for small and marginal farmers of India.

Government of India has promised to double farmers’ income by 2022 and in that direction, a new set of watershed reforms in the agriculture sector are introduced recently.

While the rest of India connected to international markets, our farmers could only sell in their traditional mandis. Our agricultural policies were created when India was a food deficit nation, and production needed to be incentivised, and the Government needed to protect the farm sector.

I will give you a brief idea about three legislative reforms in the agriculture sector. The first legislation, termed as ‘The Farmers & Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020’ seeks to create a veritable eco system where both farmers and traders can enjoy freedom of choice of sale/purchase eliminating intermediaries. It will also promote barrier free inter and intra state trade and commerce whereby the farmers will not be charged cess for selling their produce and not have to bear transport costs. Interestingly, the Bill also proposes an electronic trading in transaction. Farmers will now be able to engage in direct marketing thereby eliminating the middleman and any other intermediaries.

Another bill, titled, ‘The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020’ will empower farmers for engaging with processors, wholesalers, aggregators, wholesalers, large retailers, exporters et al, on a level playing field. It seeks to transfer the risk of market unpredictability from the farmer to the sponsor. It will also enable the farmer to access modern technology, better seed and other inputs, and reduce cost of marketing and improve income of farmers. It will also enable access to modern technology, better seeds, and effective dispute resolution mechanisms.

In addition to these two enactments, the third important bill is ‘The Essential Commodities (Amendment) Bill which aims to remove commodities like cereals, pulses, onion and potatoes from the essential commodities list, and remove the imposition of stockholding limits on such items. This Bill seeks to attract private sector/FDI into the farming sector as it takes away any excessive regulatory interference and creates a competitive market environment.

The ambitious goal of doubling farmer’s income hinges critically on unshackling agriculture marketing, which is what these Bills aim to achieve. Now the potential of electronic national market for agriculture (eNAM) can be utilized fully. Complementing these reforms, a Agriculture Infrastructure Fund worth INR 1 lakh crore (about GBP 10 billion) has been launched to create infrastructure close to the farm-gate. Further, a huge thrust is also being placed on the collectivisation of farmers through farmer producer organisations (FPOs)/farmer producer companies (FPCs), to improve their
leverage and bargaining power.

I am firm believer of the fact that change can only be embraced when we are ready to understand and appreciate all the facts and figures and indeed the vision that it is based upon. There are campaigns based either on ignorance or misinformation, which we hope will clear when it comes evident how this is a ground-breaking moment for the agricultural sector in India.

While I want to make amply clear that this is a sovereign issue and not a matter of concern or comment for any other nation, I am happy to share what our Government has achieved as an area which might inspire others to follow suit, and clear doubts on the positive trajectory these Bills envision for our farming sector.

The Constitution of India identified agriculture as a state subject –and to protect farmers ‘rights, States enacted Agriculture Produce Markets Regulation Acts (APMC) in the 60s and the 70s. There is a misconception that these new bills dismantle the existing structure of state APMCs, this is not true, in fact they provide competition to this system by opening up alternative marketing structures.

Another misguided concern is that farmers fear that procurement at the Minimum Support Price (MSP) will stop. Our Prime Minister Shri Narendra Modi has himself stated these bills do not replace the prevailing system of MSP, and farmers can sell their produce at MSP rates, if they wish to.

This is rather a group of forward-looking legislation and it is a win-win situation for all farmers, consumers and entrepreneurs. Our aim should now be to spread awareness about how path breaking these reforms are, and while it is initially hard for any system to change, I am confident once the facts are appreciated these reforms will be embraced by all.

Writer is First Secretary (Economic, Press & Information) at the High Commissioner of India, London.

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