Time for real action

The three legal reforms in agricultural marketing, announced as part of the Rs 20-trillion package for the economy, can be viewed essentially as pending work that will be pursued now. These involve amending the outmoded Essential Commodities Act (ECA), 1955; enacting a new Central statute to enable farmers to get remunerative prices by selling their produce anywhere in the country; and passing a contract farming law to legalise agreements between producers and end-users of farm products.

Efforts have for long been afoot to push these measures through with the cooperation of states because agricultural marketing is basically a state subject. But the response has been poor. Though most states have amended their marketing laws, they have not done so strictly on the lines suggested in the model Agricultural Produce Marketing Committee (APMC) law circulated by the Centre. States, obviously, do not wish to give up control over agricultural markets, which are a key source of revenue. Moreover, the market committees that run the APMC mandis enjoy considerable political clout and can, therefore, influence the rural vote bank, which is valued by political parties in the states. So, most states have only trimmed the monopoly of the APMCs over agricultural trade but without erasing it completely. Nor did they allow adequate privatisation of farm mandis, which is vital in expanding the marketing infrastructure that has failed to keep pace with growth in agricultural output. Even the setting up of the electronic National Common Market (e-NAM) could not serve the desired purpose in the initial years as the business had to be transacted through the APMCs. The only option left for the Centre to carry through the unfinished reforms agenda is to go in for Central legislation, which would override the state statutes, as is sought to be done now. This would, hopefully, help realise the longstanding goal of putting in place a barrier-free countrywide market (read single national market) for the agricultural produce.

More or less similar hurdles have been impeding legalisation on contract farming, which is deemed essential to link farmers directly with the processors, exporters, retailers, and consumers of agricultural products. Such a bonding allows the farmers to produce the products conforming to the quality standards required by the end-users. Only some states have imparted legal sanctity to the pre-production contracts between seller and buyer under their amended APMC laws. The others are reluctant to fall in line. This allows any party to renege on honouring the contract if the prices at the time of delivery do not suit them. The National Institution for Transforming India (NITI) Aayog has already drafted model contract farming legislation, which has been gathering dust. All that the Centre needs to do now is to turn it into a Central statute. 

 
The ECA, on the other hand, is a Central law that has outlived its utility. It was enacted when shortages of essential goods were rampant and black-marketing and profiteering were the order of the day. But the situation has since changed. The supplies of most commodities now exceed demand. The ECA’s draconian provisions, including preventive detention, confiscating vehicles, and attaching properties on suspicion of hoarding and black-marketing, are no longer required. The government would, therefore, do well to repeal this law rather than merely diluting it.


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