[Editorial Analysis] End of a monopoly

Mains Paper 3: Economy
Prelims level: APMC reforms
Mains level: Process to abolish the monopoly of agricultural produce market committee

Context:

• Agriculture is a state subject under the Constitution, but the Green Revolution wouldn’t have happened without the political leadership at the Centre in 1966 approving the import of 18,000 tonnes of seeds of high-yielding semi-dwarf wheat varieties from Mexico.

• The same goes for the Narendra Modi government’s decision now to enact a Central law to dismantle the monopoly of agricultural produce market committee (APMC) mandis in the wholesale trading of farm commodities.

• It’s all very well to say that “agriculture” and “markets and fairs” fall under the State List of the Seventh Schedule. However, state governments have done very little all these years to remove barriers to trade in farm produce.

Having freedom:

• Farmers, like any businessmen, should have the freedom to sell their products to anyone, anywhere and anytime. This, in turn, is also contingent upon processors, traders, retailers, or exporters being able to buy directly from them.

• Unfortunately, most state APMC laws today permit the first sale of farm produce to take place only in notified mandis within the particular tehsils or talukas. Buyers, too, need to obtain individual licenses from each APMC in order to transact.

• While some states are granting single unified market licenses and allowing direct procurement from farmers, even they require payment of APMC fee — whether or not they are using the infrastructure of the local mandi.

• Effectively, then, there is no national market for agricultural commodities. What we have, instead, are some 2,500 markets controlled by commission agents, who mediate between sellers and buyers even when not required.

Anathema to the spirit of liberalization:

• This arrangement is anathema to the spirit of liberalization and also goes against Article 301 of the Constitution, which envisages freedom of trade and commerce “throughout the territory of India”.

• If states haven’t really freed agricultural produce trading even within their own territories, the Centre is well within its rights to enact a law using the provisions of entry 33 of the Concurrent List. The latter specifically deals with agricultural produce, including “foodstuffs”, “cattle fodder” and “raw cotton”.

• In an ideal situation, from a cooperative federalism perspective, the initiative for APMC reforms should have come from the states themselves. But there have been times — whether it had to do with the Green Revolution or the nod to Bt cotton cultivation in 2002 — when the Centre had to necessarily take the lead.

Conclusion:

• The present government must make it clear that the objective behind its proposed law is not to dismantle APMCs.

• Farmers will continue to bring their produce to mandis that have good infrastructure and where they are likely to find more buyers. But that should be a matter of choice, both for farmers and buyers. APMC monopoly has to go.

• Initiative for APMC reforms should have come from states. But it is welcome that Centre is now taking the lead.

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Prelims Questions:

Q.1) With reference to the Micro, Small and Medium Enterprises (MSMEs), consider the following statements:

1. The definition of MSME will be revised by raising the Investment limit. An additional criterion of turnover also being introduced.

2. The distinction between the manufacturing and service sector will be eliminated.

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

Answer: C

Mains Questions:

Q.1) What do you mean by the APMC reforms? Do you think the initiative for APMC reforms should have also come from the states? Comment.

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