June 8, 2020
Driven by the volume and variety of the output of the agriculture sector, the Indian food industry is expected to break into new markets, increasing contribution to the global food value chain
India’s Union Cabinet has approved 'The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020' which removes restrictions in the marketing of agricultural output
The Essential Commodities Act has been amended as a step towards the transformation of the agriculture sector with investment and raising farmers’ income in the post-Coronavirus economy
The Union Cabinet has approved ‘The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020’ which will balance the risks in agri activities
India’s Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved a number of reforms in the agriculture sector that will empower farmers, improve access to essential resources, enable the development of agri infrastructure, and boost trade of agricultural commodities in the international market. The reforms follow the Government’s Rs.21 trillion (US$277 billion) stimulus package which was announced in May to tackle the impact of the Coronavirus (COVID-19) pandemic. The stimulus package, worth equivalent to around 10 per cent of India’s GDP, includes an extensive set of reforms, including improved liberalisation, policy amendments, relaxed regulations, investment in infrastructure and skill development, etc, to aid the people worst hit by the pandemic and open up new avenues of investment, trade, and employment. Herein, agriculture is a key sector for reforms to drive socio-economic growth.
Agriculture is the main source of income for over 55 per cent of India’s 1.3 billion population. The gross value added by agriculture, forestry, and fishing was estimated at around Rs.18.6 trillion during the fiscal year 2019 while foodgrain output was measured at record 283.4 million tonnes. Horticulture, dairy, and fisheries sectors also reported record output. During FY 2020, the foodgrain output is estimated to have crossed 291 million tonnes. Driven by sheer volume and variety of the output of the agriculture sector, the Indian food industry is expected to record steady growth in the coming years, breaking into new markets, and increasing supply to the global food value chain. Besides the agricultural output, India’s food processing sector has also expanded its market with high-margin and high-quality offerings. As a result, India’s total agri exports grew at a CAGR of 14.6 per cent over FY 10-19 to reach US$38.5 billion.
A new set of reforms now aim to further boost the output and income potential of the agricultural sector and the farmers. These reforms include:
India’s Union Cabinet on June 3 approved ‘The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020’ which removes the restrictions in the marketing of agricultural produce. The ordinance aims to create trading opportunities outside the APMC market yards to help farmers get remunerative prices due to additional competition. This will supplement the existing MSP procurement system which is providing stable income to farmers. The ordinance is expected to help set up One India, One Agriculture Market – an integrated ecosystem to empower agriculture and allied activities.
India’s Union Cabinet on June 3 approved an amendment to the Essential Commodities Act, a step towards the transformation of the agriculture sector and raising farmers’ income in the post-Coronavirus economy. The act will help the Indian agriculture sector commercialize its massive annual output with the backing of the necessary infrastructure and resources and easing of restrictions. The move will provide better economics to exporters and investors in the agriculture trade and infrastructure space.
Safeguarding consumers’ interest
The Government, while liberalizing the regulatory environment, has ensured that the interests of consumers are safeguarded.
India’s Union Cabinet on June 3 approved ‘The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020’ which will balance the risks in agricultural activity. The ordinance will help Indian farmers, the majority of whom operate on small landholdings, better manage the impact of factors such as weather, production uncertainties, and market unpredictability.
A series of steps have been announced as part of the Government’s stimulus programme to boost the agriculture and allied sectors. These include –
Through the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) programme, over 95.4 million farming families (as on first June 2020) have benefited and an amount of Rs.195.2 billion has been disbursed so far during the lockdown period. Additionally, Rs.80.9 billion has been paid during the lockdown under the Pradhan Mantri Fasal Bima Yojana (PMFBY).