States shouldn't charge more than 1% as mandi fee: NITI Aayog's Chand

The issue of level playing field on taxes between an Agriculture Produce Market Committee (APMC) and free-trade areas outside it, as defined by the farm Acts, can be resolved if states lower mandi fees to less than 1 per cent and a similar rate is charged on all outside transaction, NITI Aayog Member Ramesh Chand said.
 
Commenting on the middle path the Centre seems to have suggested during the last round of negotiations with protesting farmers’ groups, Chand said now that the Centre has shown willingness to make adjustments in the Acts, it is now up to farm leaders and state governments to ensure that the level playing field is allowed.

 
“According to me, in the first place state should not charge any revenue from the APMCs and provide the service for free, but if at all they have to charge it should not be more than 1 per cent of the total volume of transactions, which could also be the charge or fees for all out of mandi transactions and can be collected from traders or others as a ‘Trade Facilitation Charge’,” Chand told Business Standard.

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Chand’s comments come hours before the central government is slated to hold the fifth round of negotiations with farmers’ unions to end the now weeklong blockade of Delhi. Farmers, largely from the Northern Indian state of Punjab, Haryana and Uttar Pradesh, are protesting against the three farm Acts.

 
One of the concerns being expressed by farmers is that once trade moves outside APMCs lured by zero taxes as provided in the new Agriculture Trade Act, regulated markets will be choked of funds and wither away, leaving farmers without a well-established mechanism of price discovery.
 
As a compromise option, Agriculture Minister Narendra Singh Tomar said on Thursday that the Centre is looking at this.
 
On the question of whether this option will end competition, Chand said competition does not come from a nominal charge.
 
Giving the example of private and state-run bus services, the NITI Aayog member said in several states rates are uniform but then too people prefer private transporters over state-run buses as they provide better service.

 
On making a legal provision for Minimum Support Price (MSP), Chand said that if you fix a price through legal means then you should not expect private traders to purchase at that price because then it does not factor in the demand side of the equation.
 
“In such a scenario, the government will have to take charge of all the buying, which will lead to complete nationalisation of agriculture markets in India, which I don’t think anybody wants,” Chand said.