The Indian government has finally announced long-overdue agriculture reforms in the third tranche of measures of the economic relief package. Indian agriculture set to grow after the economic stimulus package.
Effect of the Package on the Indian Agriculture Sector
The government announced some notable and historical governance and administrative reforms related to agriculture. The amendment in the Essential Commodities Act, 1955 to deregulate the purchase and sale of certain agricultural commodities will enable better price realisation for farmers. The discussions for this amendment have been going on for almost two decades. Now, farmers can sell their produce to traders of their choice instead of the selling in APMC yards dominated by the middlemen.
Further, imposition in stock limits only in emergencies will give marketing choice to farmers. Also, the act would protect the traders against the harassment on suspicion of hoarding, black marketing, and speculation. Not only this, but the food processors and exporters will need not stock the commodities for more extended periods.
Fiscal Stimulus to the Agriculture Sector
Animal husbandry infrastructure development fund is one of the noteworthy initiatives taken by the government to boost farmer’s income. Further, a central legal framework around APMCs would circumvent states that were reluctant to amend the APMC Act in fear of losing substantive tax.
Ajay Kakra of PwC India lauded the government’s step to ensure supply chain continuity and trade flows in exceptional circumstances. Also, Industry chamber CII Director General Chandrajit Banerjee mentioned that the actions supported by funding would provide better prices to farmers.
FICCI President Sangita Reddy said that the reforms announced are capable of unshackling the agriculture sector. Besides, it is a welcoming move to strengthen infrastructure and logistics. PhD Chamber President said that the decision would address rural stress, ensure food security, and support demand. Moreover, it will create employment and attain the socio-economic development of the country.
Overall, the agricultural reforms may prove a reliable growth engine during the pandemic. It may further grow if the coordination between central and state government improves.