India's farming sector is poised for a sweeping change in
reforms, as promised by the Central Government in late 2019. In
September 2020, the Upper House of the Parliament introduced three
new Bills as reforms to the agricultural and farming sector, which
aim to liberalize the farming ecosystem significantly. These three
Bills, namely, the Farmers Produce Trade and Commerce Bill
(Promotion and Facilitation), the Farmers Agreement of Price
Assurance and Farm Services (Empowerment and Protection) Bill, and
the Essential Commodities (Amendment) Bill, aim to revolutionize
the way farm operations are carried out in India.
The introduction of these Bills is in line with the government's vision of doubling farmers' incomes by 2022. The Bills broadly focus on providing access to direct marketing mechanisms, reducing farm wastage and price stability, creating an open ecosystem beyond mandis (co-operatives), enabling contractual agreements for large orders, opening up the sector for FDI, electronic trading, etc.
Farmers Produce Trade and Commerce Bill (Promotion and Facilitation)
- This Bill aims to provide free market access to farmers along with improved transport, logistics and inter-state trade without the presence of middlemen or the mandatory requirement of trading through mandis (co-operatives).
Farmers Agreement of Price Assurance and Farm Services (Empowerment and Protection) Bill
- The Bill aims to enable farmers to negotiate contracts and personal terms for production with private buyers and large exporters while also creating a mechanism to transfer market risk to their sponsors.
Essential Commodities (Amendment) Bill
- This Bill aims to deregulate the essentials market and remove stockholding limits on essential commodities while protecting farmers and their buyers from seasonal demand fluctuations.
The Bills were passed by the Upper house of parliament on 22
September 2020 and was viewed as a significant step towards
revamping the farming ecosystem. The three Bills individually
introduced liberalizing aspects of farming from the perspective of
both small and large farmers. Currently, approximately 86% of all
farmers in India are small farmers. The Bills, in conjunction, aim
to strengthen their collective price and market value while
enabling an entrepreneurial market for farmers with improved access
to markets and technology.
The perception of the Bills has been split between different stakeholders which include farmers, the opposition, and the respective State Governments who will be impacted by these reforms. The apprehensions are majorly around the indirect redundancy of the intermediate co-operative (mandis), their employment, the impact of state taxes in the form of cess from co-operatives, the impact to farmers' lines of credit via co-operatives, and the lack of government monitoring for price support among others concerns.
While any such radical reform is met with its fair share of critique, the government has taken a step in the right direction for the farming sector, which has been an important pillar of the Indian economy. A discourse for discussion and clarification of areas of confusions with relevant stakeholders highlighting advantages of bills as well as safety mechanism to safeguard interest of farmers, should help in wider acceptance of these bills. The Central Government's efforts for the landmark initiatives are truly progressive which will provide synergy to the farming ecosystem, attract large-scale investments and FDI, improve the quality of farm produce, and enable the growth of large, improved, sustainable and technologically-sound farming infrastructure.
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