More Reform Needed

Business Standard     1st December 2020     Save    
QEP Pocket Notes

Context:  Recently, the farmer started their agitation against reforms in agriculture.

Significance of agricultural reforms:

  • Ends the monopoly of Agricultural Produce Marketing Committees: Resulted in an increase in out-of-mandi transactions.
  • Strengthened the supply chain: This will help in curbing food inflation, improving agricultural productivity, increasing infrastructure investment and farmer incomes.

Reasons for the farmer agitation

  • Vested interests: Introduction of market factors into the supply chain and the destruction of monopolies will result in loss of power for some having vested interests.
  • Fear of corporatisation: of the agricultural marketing system.
  • The spread of misinformation about the fate of the minimum support price (MSP): Farmers are being misinformed that the MSP will be removed. But it seems that the government has no such intention.
  • Concerns about nature of support: available to farmers during difficult times.
  • Political parties are influencing farmers: for their political gains.
  • Failure of government to introduce healing measures: since the government failed to anticipate the objections to the reforms.

Way forward:

  • Design and publicise alternate mechanisms of support: Support systems without undermining the new agricultural marketing laws.
  • Design new forms of price support: That does not distort the market or violates India’s international trade obligations.
  • For e.g. an all-India income support plan, price compensation schemes to make up for the difference between market prices and MSP.
  • Take steps to avoid distress sales: by using warehouse receipts as recommended by the Commission for Agricultural Costs and Prices (CACP).
QEP Pocket Notes