Revamp scheme for 22,000 rural haats drags a year after its announcement

Only 1,878 of 4,600 haats selected in first phase, not one has yet been upgraded; Only 4% have a godown, 15% have other marketing infra

A year after finance minister Arun Jaitley announced the upgradation of 22,000 rural periodical markets in his budget speech on February 1, 2018, the progress of the scheme has not picked up as expected. Though the guidelines for these rural haats, or gramin agriculture markets or GrAMs in government parlance, have been finalised, their survey still remains incomplete. 

Only half of them have been surveyed to date, in which, the ministry of agriculture found that they are not even close to a how a formal market should be. In terms of being equipped with bare minimum marketing infrastructure, just about four out of every 100 haats have a godown to store food products, and about 15 have a raised platform to set up a shop, the parliamentary standing committee on agriculture (PSC-A) in the Lok Sabha noted in a report tabled in earlier in January. 

Only about 13 per cent of them have notice boards which generally act as an information help to buyers and sellers, and a similar proportion of them have weighing scales, it said. In terms of basic infrastructure, only a fourth have electricity, and 15 per cent have an all-weather approach road. Only three per cent have toilets, the PSC-A report said.

Upgradation of one GrAM would require about Rs 15 lakh, taking the approximate total cost to upgrade all the haats in the country to nearly Rs 3,500 crore. The budget had promised Rs 1,000 crore through creation of an Agri-Market Infrastructure Fund (AMIF), but the union cabinet has not approved it yet. 

The government’s intention to develop GrAMs is to reduce the area serviced by one agricultural market. Currently, one market serves an area of about 460 sq km which the National Farmers’ Commission had recommended to bring down to 80 sq km. 

GrAMs versus APMC

Agriculture Produce Market Committees, or APMC mandis, have better basic marketing infrastructure in place. About 83 per cent of APMC mandis have a godown, while two-thirds have a covered platform for keeping foodstuffs and facilitating a link between the buyer and seller. However, only about half of them have weighing facilities, said the PSC-A report.

However, the situation is worse when it comes to services that enhance the value of the produce. Only 22 per cent mandis in India have a grading facility, while about 15 per cent have cold storage.  

The agriculture ministry decided to modernise these 22,000-23,000 haats after the budget announcement last year, in association with the ministry of rural development (MoRD). While the former acts as the nodal ministry, the latter is supposed to lay designs for the modernised haat and build it under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

But, the finances for these are yet to be approved. The proposal for creating agri-market infrastructure fund (AMIF) of Rs 2,000 crore, which will partially fund the upgradation of rural haats, has been approved by the expenditure finance committee, and is awaiting the approval of Cabinet Committee on Economic Affairs (CCEA). This matter is likely to be taken up in the cabinet meeting soon. 

Now, there are about 2,332 primary and 4,298 secondary agriculture produce marketing committees in the country, but there are two major shortcomings that the parliamentary report underlines. “In secondary wholesale markets, trader cartelisation takes place. Marketing fee and commission are collected from net proceeds of farmers when they should be legally collected from buyers,” it said.

GrAMs are more in number than APMC mandis, as they are mostly informal and generally service only a group of adjacent villages. The government intends to bring in GrAMs specifically to address this issue. However, wholesale trade does not happen in haats in the first place.

Pure retail play

About 95 per cent of trade that happens in GrAMs today is retail and not wholesale, meaning that the haats are generally used as place for the farmer and village consumer to meet and carry out a buy-and-sell transaction. It is not as a market where supply-demand dynamics work, or one which can help match the demand in a faraway market with supply from another.

While the government intends to change this nature of haats and convert them into aggregation points where wholesale trade will happen, no action has been taken in this direction yet.

Experts say that more than number, transparency in markets helps raise wholesale prices and subsequently farm incomes. 

“A farmer would realise a better price one the process in a mandi would become transparent,” Siraj Hussain, former agriculture secretary, told Business Standard.

As for the involvement of states in the process, the MoRD sought inputs from states after the budget announcement, after which states together came up with a proposal of 5,002 haats. However, the PSC noted that most of the proposals pertained to new haats, as opposed to upgradation or modernisation of existing ones, which the Union Budget 2018-19 had envisioned.

When the funding is approved and released, four states--Maharashtra, Uttar Pradesh, West Bengal and Madhya Pradesh--stand to benefit the most. They have the highest number of existing rural haats in India, which total to about 12,000, or more than half those in the country.

Funding the scheme

The cost of modernising one haat is relatively cheap. It would cost about Rs 15 lakh to develop one GrAM, according to estimates from MoRD. This would take the total need for 22,941 haats to Rs 3,441 crore. The government had intended to use Rs 1,000 crore from the AMIF to develop 4,660 haats in the first year, which has not yet happened.

The remainder from AMIF, another Rs 1,000 crore, was to be used towards the online marketing platform eNAM (e-National Agriculture Market). This platform, established online, has found few takers so far. About 10.5 million farmers are registered on the eNAM portal, which is less than one per cent of the cultivating population in the country. Of them, less than 45 per cent used the online platform as of March 2018.

To speed up the development of GrAMs and remove the irregularities, the parliamentary committee said that the GrAM scheme should be fully centrally funded, since providing loans would not be sufficient. Further, it also said that the target of modernising 4,600 haats in one year is “too low” a target.

"Our Country is yet to solve the 'riddle of agriculture marketing' since majority of farmers are not able to get benefits of bumper production due to limited marketing platforms and hegemony of middleman in grain mandis that led to low prices for their produce," the report said. It remains to be seen whether or not the coming budget addresses this question.