The government announced a slew of measures for the agriculture sector, including a Rs 1.63 lakh crore outlay, and amending the stringent Essential Commodities Act to remove cereals, edible oil, oilseeds, pulses, onions and potato from its purview.
Hailing the third tranche of stimulus focusing on the agriculture and allied sector, farm industries and experts on Friday said the government has finally decided to “bite the bullet” by announcing long overdue big market reforms that would benefit both farmers and consumers. In the third set of measures under the COVID-19 package, the government on Friday announced a slew of measures for the agriculture sector, including a Rs 1.63 lakh crore outlay, and amending the stringent Essential Commodities Act (ESA) to remove cereals, edible oil, oil seeds, pulses, onions and potato from its purview. Also, a new law will be framed to give farmers the option to choose the market where they want to sell their produce by removing inter-state trade barriers and providing e-trading of agriculture produce.
“The last three of the 11 measures announced by the Finance Minister are bigger than the first eight. This should have been done in the first term of the Modi government. With three big measures, the government finally bites the bullet,” noted agricultural economist Ashok Gulati told PTI. It’s a bold reform and announcing it now shows that the government wants to convert this COVID-19 crisis into an opportunity for farmers. But it should be implemented in letter and spirit, he said.
India has never seen agriculture market reforms this big! FM’s announcements explained
The last three measures related to deregulation of agriculture commodities from the Essential Commodities Act (ECA), imposition of stock limits only during emergencies, giving marketing choice to farmers and allowing private participation will benefit both farmers and consumers, he added.
Echoing views, EY India Partner Satyam Shivam Sundaram said that deregulation of mandis is a “very bold step” and it was due for a long time. “We will get to know more as we see the fine-prints come out. When considered along with farm gate infrastructure and proposed investments in the value chain, it would go a long way in helping farmers realise 25 to 30 per cent higher income, depending on the produce,” he said.
Ajay Kakra of PwC India also mentioned that the decision to amend the ECA is a correct measure to ensure supply chain continuity and trade flows in the event of short supplies and exceptional circumstances. In an event like COVID-19, this will be helpful to control supply chain disruptions.
Industry chamber CII Director General Chandrajit Banerjee said that the amendment of the ECA and the agricultural marketing reforms proposed by Finance Minister Nirmala Sitharaman are indeed “heartening”. “We hope that the states fall in line with these changes. What is also critical is that these changes are being supported by substantial allocation of funds including Rs 1 lakh crore for the development of agricultural and food processing infrastructure,” he said in a statement. The agricultural sector has been subjected to a host of restrictions which are no longer relevant, and this has hindered the marketing and price realisation of agricultural products, he added.
Deloitte India Partner Anand Ramanathan said the announcements will help improve farmer realisations and also help them build better market linkages for their produce. The removal of cereals from the ECA, the agricultural marketing policy changes being made to facilitate direct sale to aggregators and the assistance being provided to enhance food processing and post harvest infrastructure in proximity to farm gates are excellent formulations which will help farmers, he added.
Agri-tech firm AgriBazaar co-founder and CEO Amith Agarwal said the announcement of Rs 1 lakh crore Agri Infrastructure Fund will significantly contribute towards mitigating post-harvest losses and wastage by giving a fillip to scientific storage facilities and also, help the small farmers earn additional income by way of value-added agri-produce. “In the immediate term, it will provide an impetus for the agri sector to come out of the COVID-19 shock, while in the long run it will secure India’s food security and supply chain in a self-sufficient manner. Today is a great day for India’s small farm owners,” he added.
Food services firm Elior India CEO Sanjay Kumar said, “The steps taken by the government in order to empower the marine and agriculture sectors is appreciated. In order to go local to global, the stimulus and capital funds should be used for bringing in value addition for fishery and agricultural products to gain advantage in international markets and boost exports.”
However, with regards to price assurance for farmers, there is a need for an assured demand for consumption, he said. “Hence, we look forward to an announcement regarding reduction in tax on consumption and GST rate that will in turn drive consumption. Also, we hope that input tax credit is restored as this will help ensure the success of the finance minister’s initiative in streamlining and supporting the development of infrastructure in the food supply chain,” Kumar noted.
Tasty Dairy Specialities Chairman Atul Mehra said the measures announced will help in reviving the agriculture, dairy, fisheries and allied sectors, taking closer to the Prime Minister’s vision of ‘self reliant’ country. “India is one of the largest milk producers in the world, and the suggested initiatives and reforms will help India to go to the next level. This will help the country to make a mark internationally with the higher quality dairy products…,” he said.
Animal husbandry infrastructure development fund and national animal disease control programme are few of the noteworthy initiatives among others which will help in long term development, Mehra added. These are going to fulfill the aim of doubling farmers’ income and establishing our products in the international market, he added.
Krishi Network Platform CEO Ashish Mishram said making the agri-produce market more competitive by minimising controls and democratising access is definitely the biggest reform agri sector needs at the moment.
“It is a welcome move, and should be backed with the new APMC act soon,” he said.
The finance minister also talked about devising ways so that farmers could have an idea of harvest time prices, he said adding that this is a complex technological problem, the government should collaborate with farmer tech platforms for this. Welcoming the measures, FINDOC Executive Director Nitin Shahi said, “Government has been offering loans and moratorium till now, actual demand of the industry is to reduce taxes and direct benefits for the economy to revive.”