A GST Council-Like Body For Agri Reforms Makes For A Good Idea

The Union government is keen on constituting an empowered agricultural marketing reform committee of state agricultural marketing ministers on the lines of the Empowered Committee of State Finance Ministers on GST. This is an idea, in Manmohan Singh’s words, whose time has come. One need not be an economist to know that agriculture is languishing in India. Employing around half the workforce, it contributes less than one-fifth to the GDP. As marketing has been a big problem, Agricultural Produce Market Committees (APMCs) were set up to ensure that farmers get a fair deal, but these are widely regarded as a drag on the farm sector.

The APMC Act stipulates a specified market area for carrying out the sale and purchase of agricultural commodities. Over the years, this has led to monopolistic practices—at the expense of the farmer. Further, the fragmented nature of APMCs across states has created barriers to the free movement of agricultural produce within the country. For a sector that relies heavily on timely access to markets, these bottlenecks exacerbate the plight of farmers. The Narendra Modi government tried to reform agricultural marketing by introducing the Farmers’ Produce Trading and Commerce Act 2020 (FPTC Act) but, owing to stiff resistance from some farmers’ organisations, it was forced to withdraw it, along with two other proposed laws.

The GST Council-type mechanism has the potential to address the issue, as it works on the principles of federalism and consensus building. Lest one forgets, the three farm laws proposed in 2020 could not be implemented primarily because the sector is politically sensitive and socio-economically complex. Besides, the hasty manner in which these were cleared, at a time when the nation was combating Covid, also triggered many conspiracy theories. It looks like the government has learnt from its mistake and it now seems keen on a consultative and consensus-driven approach to the issue. The GST Council brought states and the Centre on a common platform to design and implement a transformative tax regime. It worked on the principles of federalism, consensus-building, and cooperative decision-making. A GST Council-like approach can harmonise marketing laws across states, creating a unified national market for agricultural produce. This would facilitate a seamless movement of goods and help farmers get better prices for their produce.

Unlike top-down legislation, reforms developed through consensus are more likely to gain acceptance among stakeholders, as they can effectively address concerns of farmers, states, and other stakeholders. By fostering competition and reducing the dominance of APMCs, the new framework can enable farmers to realise better prices. The empowered committee can also promote adoption of technology-driven solutions like e-NAM (National Agriculture Market) to enhance transparency, efficiency and farmer participation in the market. Apart from building consensus among states and all stakeholders, the proposed federal body must ensure transparent communication to address misconceptions and concerns. It should also design a phased implementation plan to avoid disruptions and provide financial and logistical support to states for the transition. Additionally, the proposed committee must prioritise the interests of small and marginal farmers, who constitute the majority of the farming community. While working on the new mechanism, the government should also keep striving to promote other reform measures in the farm sector.