Agriculture Sector of Indian Economy: Recent Developments

Agriculture Sector of Indian Economy: Recent Developments

The outbreak of COVID-19 has impacted nations in an enormous way, especially the nationwide lock-down which have brought social and economic life to a standstill. The COVID-19 pandemic badly affected the manufacturing and service sectors. Agriculture sector is the sole bright spot which recorded growth rate of 3.37 per cent in the first quarter of 2020-21 against 2.97 per cent in the same quarter last year.
As per data released by the Government of India, during the 2019-20 crop year, India has attained food grain production at a record high of 295.67 million tonnes. Now the government has set the food grain production target at 298.3 million tons for the year 2020-21 which is up by 1 per cent from the record output it achieved in the current year.

Moreover the terms of trade of prices for agricultural commodities had been rising since September, 2019. Food inflation has remained high during the first quarter of 2020-21 as well, at 9.2 per cent compared to 1.7 per cent in the corresponding period of last year. This could be because of the sustained demand for food during the lockdown period. With increase in incomes of farmers, the rural core inflation in June, 2020 increased by 163 basis points as compared to March 2020, which is indicative of resurgence of demand in rural areas.

The government of India has treated the agriculture sector rather especially during this COVID-19 pandemic period. It has made special exemptions for the agriculture sector during COVID induced lockdown. While most economic activity was at a standstill due to COVID induced lockdown during the months of April-May, 2020, farming activities were exempted to facilitate uninterrupted harvesting of Rabi crops and sowing of Kharif crops. This was a major factor which enabled smooth flow of agricultural commodities throughout the lockdown period and across rural and urban areas of the country.

Recent Developments in agriculture sector: Centre government has passed three bills in parliament regarding the reforms in agriculture sector to open the door for corporate sector.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 allows intra-state and inter-state trade of farmers’ produce beyond the physical premises of APMC markets. State governments are prohibited from levying any market fee, cess or levy outside APMC areas.

The Farmers Agreement Ordinance creates a framework for contract farming through an agreement between a farmer and a buyer prior to the production or rearing of any farm produce. It provides for a three level dispute settlement mechanism: the conciliation board, Sub-Divisional Magistrate and Appellate Authority.

The Essential Commodities (Amendment) Ordinance, 2020 allows the central government to regulate the supply of certain food items only under extraordinary circumstances (such as war and famine). Stock limits may be imposed on agricultural produce only if there is a steep price rise.

This ordinance would help big business do direct deals with the farmers, but it is not clear that it would help the farmers who have little bargaining power. It could end up demolishing the existing faulty structure without replacing it with anything better. The legal sanction to contract farming will help corporate sector to enter into agriculture sector that may increase their productivity. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services (FAPAFS) 2020 ordinance has little to offer to millions of farmers who are currently engaged in contract farming through informal agreements of theka or batai.

Farmers of the country opposing the bill on ground that corporate sector will exploit their interest and within the specific framework of policy implementation, all the farmers would be converted into land less labourers. The main issue at this point of time is the opposition to the three farm ordinances that were announced by the central government in June this year. The opposition to the farmers’ produce trade and commerce (promotion and facilitation) ordinance, the essential commodities (amendment) ordinance, the farmers (empowerment and protection) agreement on price assurance and farm services ordinance, 2020 is a common factor across the states. The majority of the farmer telling the people how the fancy sounding ordinances are anti farmer. These ordinances take away the minimum support price guarantee and this would impact the public distribution system (PDS) in the long run.

The majority of illiterate small and marginal farmers with little information about distant markets seek better prices for their products. These reforms will encourage multinational companies to enter the farming sector. Scrapping of APMC in Bihar brought no benefits to the farmers but led to their exploitation at the hands of big traders. The APMC Act, it said was introduced in the 1960s and 1970s to put a check on monopoly of large traders and big buyers who historically used their economic means to buy grain from poor farmers at low prices.

The ongoing peasant struggle in 18 states of the country, which started from Punjab, has brought some very important issues before society and the government. At first glance the struggle seems to be limited to the repeal of three newly enacted laws on agriculture by the central government but in reality, it is a struggle to save the country’s federal structure. The struggle of these groups is going on in a democratic and peaceful manner and making every effort to take their struggle to the whole country through collective decisions, to awaken the political parties of the country and to make their struggle a people’s struggle. Let’s hope that the ongoing struggle may end in favour of farming community in peaceful manner. The government should consider their genuine demands and make necessary changes in three farm ordinance.

Dr. Sukhvir Kaur                                                                                                                            Dr. Karambir Singh
Assistant Professor in Economics                                                                                               Principal,
DKC, Zirakpur.                                                                                                                               DKC, Zirakpur.

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