#fptca

Although the APMC regulations were designed to safeguard the interests of the farmers, the actual implementation of these regulations has remained far from ideal and several problems in the functioning of the APMC markets persist. It has been found that commission agents and Marketing Committee members often form cartels and collude to manipulate prices. Given the inadequacy of formal-sector credit, particularly for small peasants, it is common for the traders and commission agents to provide credit to farmers and tie crop sales with repayment of credit, charging a high rate of interest from the farmers.

The problems of existing regulated markets — cartelization, use of unfair practices, interlocking of trade with provision of credit, and negligible participation of women — are rooted in lack of implementation of agrarian reforms and effective democratisation of the social, political and economic institutions in Indian villages. Failure of governance and ineffective regulation are an outcome of political dominance of big capitalists, merchants and landlords. The end to economic exploitation of peasantry can only be achieved through implementation of redistributive agrarian reforms and effective democratisation. These are critical to make the regulatory systems more effective. Farmers need more effective regulation, and not less regulation, in the arena of agricultural marketing. Making agriculture remunerative for farmers is a key challenge. This requires an overarching review of policy changes that have been introduced in the areas of input pricing, trade liberalisation and prices of agricultural produce as part of the liberalisation programme. These changes have been responsible for the deep agrarian crisis that rural India finds itself in today.

Over the last few years, the central government has used various ways to coerce the State governments to amend their respective APMC Acts to liberalise agricultural markets. In the terms of reference of the Fifteenth Finance Commission, the central government specifically asked it to consider using performance-based incentives for the provision of grants. Consequently, in its report for the year 2020-21, the Finance Commission introduced performance-based grants and recommended that the States that pass the model “Agricultural Marketing Produce and Livestock Marketing (Promotion and Facilitation) Act”, “Model Agricultural Produce and Livestock Contract Farming and Services (Promotion & Facilitation) Act” and the “Model Agricultural Land Leasing Act, 2016” in their legislatures would “become eligible to avail the grants awarded by us from 2021-22 onwards”. This was an unusual recommendation. Although several Finance Commissions in the past have used developmental indicators to measure resource requirements of States, to facilitate them to take policy measures for development in the States, and more recently, to impose fiscal discipline on the States, there are not many precedents of Finance Commissions demanding specific legislative changes by States for them to become eligible for grants. The most important, and perhaps the first such case, was when the 13th Finance Commission made amendment/enactment of the FRBM Acts by States as a precondition to get the State-specific grants. But the Fifteenth Finance Commission went a step further, unprecedented in the history of Finance Commissions, to demand that States enact legislation in areas that were not  directly related to State finances or fiscal discipline of the States.

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BÁO GIÁ CHỮ KÝ SỐ FPT-CA

Would tax and other economic incentives provided under the FPTCA make investments in agricultural marketing more attractive and draw private corporate investors? There are at least two reasons why this might not turn out to be the case. First, public and the private investment are complementary. Creation of basic infrastructure in the public sector results in downstream private sector investment in cold-storages, agro processing and retail. A decline in public investment could become a barrier for private corporate investment as well. Secondly, an unprecedented economic crisis caused by the COVID pandemic (and reckless policies used to deal with it) is likely to result in a general slowing down of private investment. While world over countries are using public investment to rebuild the economies, relying on private investments for creating basic infrastructure in the current context does not seem to be a promising strategy.