On 23rd May 2019, the BJP-led NDA coalition rode back to power with a thumping majority thereby assuring India of a stable government for the next 5 years. Amongst other things, one of the primary challenges the new government faces is reviving the agriculture industry in India.
While the Central Govt. should be lauded for launching pro-farmer schemes like higher Minimum Support Prices (MSPs), Operation Green (to help TOP – Tomato, Onion, Potato farmers), Crop Insurance, Soil Health Cards, etc. in the last 5 years, more needs to be done to significantly improve the slow growth rate of the Indian agriculture sector and in the process achieve the Hon. Prime Minister’s ambitious vision of doubling farmers incomes by 2022.
Below are 3 recommendations to revive India’s ailing agriculture industry:
1. Create One State One Market
With the Goods & Services Tax (GST) transforming India to a ‘One Nation, One Tax’ economy, the Central Govt. embarked on an ambitious mission of creating a ‘One Nation, One Agricultural Market’ by introducing e-NAM in 2016.
The road to creating a unified market platform goes through a unified State Agricultural Market (SAM).
However, in a vast and geographically diverse country like India where the onus of agriculture marketing lies with each individual state, it is imperative that the Central Govt. embraces “the whole is greater than the sum of its parts” principle. What this essentially means is that rather than creating one single marketing unit like e-NAM, the government should look at creating a network of individual marketing units by empowering the states to create their own State Agricultural Market (SAM) and cohesively interlinking each SAM to create a unified National Agricultural Market (NAM).
The state of Karnataka has already shown the way by successfully creating India’s first SAM through its Unified Market Platform (UMP) that has completely transformed the state’s agricultural marketing and enhanced its farmers’ incomes. More about the UMP can be read here.
2. Make trade movement across states seamless
Agriculture being a state subject, at present, each state’s respective APMC Act governs the primary agricultural trade in their respective states. This impacts the free movement of agricultural commodities between states as each state has its own rules, regulations, and processes.
To ensure a free and open market that facilitates seamless inter-state and intra-state trade movement, it is imperative that the states completely overhaul their existing APMC Acts.
While the Honorable Prime Minister had urged this to all Chief Ministers through a letter sent on 9th March 2018, not enough has been done by many states to reform their respective APMC Acts. The Central Govt. should renew its focus to get it done and the states should undertake other market reforms to increase efficiencies of their regulated primary markets.
3. Focus on efficient logistics: Trinity of Road, Rail and Air
India is more densely populated than any of the large economies like the United States of America or China. In India, the distances between the consumption and production centers are relatively closer than in other large countries. Despite such advantages, our freight movements are less efficient than these economies.
With the world’s second largest rail network and a vast road network now reaching the remotest corner of India, the interplay of rail and road transportation leading to efficient logistics requires a significant amount of work.
We should prioritize in making rail freight as the key mass-movement transportation for agricultural commodities as well. Rail Freight Corridor is already planned and its execution needs to be expedited. Further, the diverse mechanisms for booking rail freight should be made easily available to masses.
Rail freight hubs can be the solution to prevent wastage during transportation for perishable agricultural commodities. By developing a concrete plan for creating multiple agri-hubs spread across the country, the government can make use of the existing network of spokes that would ensure a seamless and swift movement of agri commodities at a pan-India level.
In A Nutshell
With more than 50% of India’s total population dependent on agriculture, the new Central Govt. should expedite effective execution of the programs already in place and swiftly come up with innovative measures to rejuvenate India’s agriculture sector. A resounding victory in elections gives the government a unique capability to push its reformative ideas more aggressively with various states to double farmers’ incomes by 2022.