Two reforms India might like to expedite after the Covid-19 crisis is over

A fully-integrated farm market, more local markets and multiple-location ration cards could have alleviated the problems of migrants, farmers, traders, transporters and FMCG firms at the outset

For 60-year-old Islami Begum and a much-younger Pradeep Sharma, both residents of Bamrauli Katara village near Agra, the Covid-19 lockdown has thrown up a new set of challenges that should never have existed had two major reforms currently underway across the country reached their finality.

While, Islami Begum wasn’t able to access rations from a shop in Bamrauli-Katara as she had her name listed in a shop in adjoining Fatehpur-Sikri district, Sharma was finding it difficult to sell his freshly harvested potato to distant mandis in Mumbai and Bengaluru because transporters weren’t willing to ferry the produce over such a long distance, fearing police a crackdown while crossing borders.

Defeated, Sharma has now decided to store his crop under the shade and wait for the right moment to sell them.

According to a Credit Suisse report, market arrivals fell by 50-90 per cent during the first few days of the lockdown.

As Covid-19 lockdown gripped the entire country, governments both at the Centre and State scrambled to ease restrictions to ensure the smooth movement of essential commodities across different geographical regions. Thousands of railway rakes are running several kilometers crisscrossing the length and breadth of country to delivery dry rations to millions of people.

But the fact remains that for both Islami Begum and Sharma, all this is of little consequence as their very basic difficulties aren't being addressed.

Had the country put in place a fully-integrated pan-India agriculture market, with well-reformed APMCs that freely allowed direct purchase and a greater number of regulated markets much closer to the villages, along with an operational multiple-location ration card, many of the problems faced by migrants, farmers, traders, transporters, food-processing units and FMCG companies wouldn't have occurred in the first place.

Studies conducted in the past show that due to inefficiencies in the market, a producer realises just 20-50 per cent of the price the consumer pays, which in the current crisis, might have gone up manifold.

A lot of these reform measures have to be accomplished with active support from state governments and it is their reluctance that has kept them stagnating.

Placing agriculture marketing under the Concurrent list, as suggested by the Ashok Dalwai Committee on doubling farmers income could be an answer to this, but bringing states on board on this is difficult as states vehemently oppose the recommendation.

Having said that, after the Covid-19 lockdown, the Central government did announce a slew of reforms on the e-NaM platform.

These included, enabling farmers to sell their produce from Warehousing Development and Regulatory Authority (WDRA)-registered warehouses notified as deemed markets on the e-NAM platform and allowing Farmer-Producer Companies or Organisation (FPOs) to upload their produce from collection centres with picture/quality parameters for online bidding on e-NaM without physically reaching the mandis. However, most of these are encountering procedural bottlenecks that are being sorted out.

According to official data till March 2020, around, 13 States and Union Territories, and over 200 mandis have participated in inter-state trade under the e-NaM platform.

These include Uttar Pradesh, Uttarakhand, Andhra Pradesh, Telangana, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Chandigarh, Himachal Pradesh, Haryana, Jharkhand and Tamil Nadu, while inter-state trade has been recorded in 20 commodities such as vegetables, pulses, cereals, oilseeds, and spices.

However, given than India has over 7,000 registered APMCs and more than 22,000 sub-markets (of which half fall within some sort of regulation) spread across 36 states and union territories, the volumes achieved so far for inter-state trade are relatively small.

Out of the 128,000 registered traders on the e-NaM platform, just about 28,000, or 22 per cent, have a unified single license to trade and most of them are within their states, and not intra-state.

In total, in the past four years since the scheme started, 585 mandis have been integrated with e-NAM across 16 states and two UTs, with a user base of 16.6 million farmers, 128,000 traders and 70,934 commission agents.

As of March 31, a total of 33.9 million tonnes of goods valued at about Rs one trillion have been traded on e-NAM during the past four years.

The compounded average growth rate (CAGR) during the past four years has been 28 per cent and 18 per cent in value and volume terms, respectively.

The Covid-19 crisis has also highlighted the need for multiple selling options for farmers and not just for the existing network of mandis and sub-yards.

Programmes like setting up 22,000 rural markets (GrAMS) through properly reformed mandi rules should get a big boost if the crisis like the current one for growers have to handled efficiently.

In India, there is one regulated market per farmer within an area of 457 sq km, while according to the National Farmers Commission (NFC), one such market should be within an area of 80 sq km.

Clearly India is way behind when it comes to more marketing options for farmers.  

One-nation-one-card 

Another big reform that could have made a big difference particularly in the current crisis is the ongoing programme of one-nation one card.

Currently, as per the Central government, intra-state ration card portability is functional in 11 states and inter-state portability between the eight states of Andhra Pradesh and Telangana, Gujarat and Maharashtra, Haryana and Rajasthan and Karnataka and Kerala.

This means that a ration card holder in Maharashtra can not only purchase his monthly quota from any shop within the state but also from Rajasthan, if he has relocated there.

Had intra-state and inter-state portability been fully operational across the country, it could have provided a great deal of relief to the estimated 140 million migrant population across the country, many of whom don’t have the ration card in their current addresses.

According to the food ministry website, a little over 700,000 tonnes of foodgrains were distributed through inter-state portable ration cards in March 2020, out of the 3.6 million-plus tonnes of grains distributed across the country to more than 810 milliion beneficiaries through a network of over 470,000 ration shops.

A pre-requisite of one-nation-one-card is that ration shops should have electronic point-of-sale (e-PoS) machines. The Food Ministry website shows that out of 477,000 functional ration shops in the country, over 96 per cent have e-PoS devices.

India's complex public distribution system can only run efficiently with perfect coordination between the Centre and the states in embracing anything related to agricultural marketing and creating a pan-India integrated national market for farm produce.

Once the Covid-19 crisis blows over, perhaps these are critical areas that Central and State governments might want to look at on a war footing.