THE GIST of Editorial for UPSC Exams : 25 May 2020 (Hardly the 1991 moment for agriculture(The Hindu))

Hardly the 1991 moment for agriculture(The Hindu)

Mains Paper 3:Economy
Prelims level: APMC Act
Mains level: Issues with APMC Act

Context:

The announcement of reforms in agricultural marketing by Finance Minister Nirmala Sitharaman, in May, has been hailed by some as the “1991” moment for agriculture.
While it does not mean much on the ground, it has successfully managed to deflect attention from the pittanceoffered by way of fiscal support to the agricultural sector.
Even then, the reforms are no more than reiterationsof earlier announcements.

Reforms announced:

The three reforms regarding agricultural marketing were the reforms in the Agricultural Produce Marketing Committee (APMC) Act, the Essential Commodities Act, and on contract farming.
All of these have been in discussion for almost two decades, with the APMC Act having already seen substantial reforms in many States.
The first comprehensive model act on APMC was proposed during 2003, and since then, similar efforts to push for more reforms have been proposed in 2007, 2013, and as late as 2017 by the present government.

APMCS and Changes by States:

The main argument against the APMC Act is that it creates barriers to the entry and exit of traders and makes the sale and purchase of agricultural produce compulsory for farmers as well as traders.
Some of the criticism regarding the functioning of the APMC is valid, to which State governments have been responsive; as many as 17 State governments having amended the APMC Act to make it more liberal.
In fact, the regulations and the functioning of mandis vary a great deal across States.
Kerala does not have an APMC .........................

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Political interference:

Despite these reforms, APMC mandis continue to be vilifiedfor all the illsplaguingmarketing infrastructure and the low prices received by the farmers for their produce.
The problem with mandis is not the regulation per se and the structure of mandis but the political interference in the functioning of the markets.
These are more obvious in case of large mandis specialising in commercial crops and fruits and vegetables, where production is regionally concentrated.
But even with these deficiencies, APMC mandis continue to play an important role in providing access to market for farmers.

The Bihar Example:

But did the reforms lead to a better outcome for farmers in those States where the reforms were undertaken? The best example is Bihar.
The general argument in favour of reforms is that it will allow private investment in marketing infrastructure as well as provide more choices to farmers, leading to better prices received by farmers.
In the case of Bihar, while no investment came in building market infrastructure, the loss of revenue due to the repealof the APMC also led to deterioration of existing infrastructure in the State.
The revenue collected from the APMC earlier was used not only for the modernisation of these market yards but also for the laying of roads and construction of other infrastructure to provide farmers better access to markets.
But after the repeal, there have been no takers for these market yards, with no investment in creating private mandis.
On the other hand, it has led to proliferation of private unregulated markets which charge a market fee from traders as well as farmers, and without any infrastructure for weighing, sorting, grading and storage.
Even in other States where there is deregulation to allow private traders, there is hardly any investment to create market spaces let alone provide other facilities.
There is also no evidence that farmers have received better prices in private mandis outside the APMC.

Invest in upgradation of infrastructure:

While there have been instances of collusion and corruption in the running of the APMC, they continue to provide essential services to farmers.
However, the vilification of APMCs has allowed the government to escape the responsibility of creating marketing infrastructure for millions of farmers.
As against the recommendation that a regulated market should be available to farmers within a radius of 5 km, currently regulated markets cover 457 sq. km.
There are more than 7,000 regulated ..............................

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Decline in demand:

For much of the period during the last two years, terms of trade have moved against agriculture, with agricultural commodity price inflation actually being negative for a large part of the last two years.
With underlying weakness in demand and obsessionwith inflation targeting through fiscaland monetarypolicies, most agricultural commodities have seen a sharp decline in demand and, consequently, prices received by farmers.
The argument for choice of markets is only valid as long as there are buyers with purchasing power in the market.
No amount of marketing reforms will lead to higher price realisation for farmers if the underlying macroeconomic conditions are unfavourable to agriculture and farmers.

Increase fiscal spending:

Even before the lockdown, the primary task of the government, especially the Finance Ministry should have been to increase fiscal spending to revive demand in the economy.
This has become even more ,..........................................

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Conclusion:

These, rather than the hollow announcements of reforms, will go a long way in ensuring higher incomes to farmers.
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Prelims Questions:

Q1. With reference to the World Telecommunication and Information Society Day 2020, consider the following statements:
1. World Telecommunication and Information Society Day 2020 is being observed on 17 May with the theme “Connect 2030: ICTs for the Sustainable Development Goals (SDGs)”.
2. International Telecommunication Union (ITU) is a specialized agency of the United Nations (UN).

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2