Now that corporate houses have discovered global opportunities in the Indian farm sector and have begun to invest in new agri-businesses, the need for reform of the agriculture sector has become all the more urgent. | |
| Successive governments since the economic liberalisation process began in the early 1990s have avowedly been committed to reforming agricultural marketing, lifting controls and creating an environment that would facilitate greater private investment in this sector. |
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| The present UPA government is no exception, as evident from the statements of the Prime Minister and his finance and agriculture ministers at the Ficci agriculture "summit", held last week. |
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| Mr Chidambaram even spoke of opening up retail trade in agriculture to foreign direct investment. Unfortunately, in its 11 months in office this government does not seem to have given any real push to the reforms process for agriculture. |
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| Matters are either stuck where they were a year ago or have made little progress. Though the bulk of the blame for this can be put at the door of the state governments, the Centre cannot be absolved of its responsibility""which among other things is to spur the states into action. |
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| Amending the laws relating to agricultural produce and marketing committees (APMC) is the key issue on which hinges the growth of private sector participation in agricultural marketing, processing and exports. |
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| Only five or six states have taken concrete action on this front, and none has so far notified any amendments. Without the liberalisation of these laws, neither the proliferation of contract farming nor the emergence of efficient and competitive private markets is possible. |
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| Companies that are already into contract farming do so at their own initiative and risk. |
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| The other critical reforms still awaiting fresh momentum include a further dilution or abrogation of the essential commodities law; revitalisation of the cooperative credit infrastructure; irrigation sector reforms, including the imposition of realistic water charges; land law amendments to enable private investment in wasteland development ventures; and the introduction of a legally tradable warehousing receipt system. |
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| Though the flow of farm credit from commercial banks has risen, while also having got cheaper, the vast cooperative credit infrastructure remains in a shambles. |
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| Interest rates on cooperative sector credit remain relatively high. The enactment of a single food law, to replace the plethora of statutes that currently govern the food-processing sector, has been talked about for over a decade but the draft Bill is still being finalised. |
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| The instruments of price control, such as fixing minimum support prices and monthly release mechanisms, which should have been scrapped before the introduction of futures trading, are still continuing. |
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| And what is worse, overall investment and, hence, capital formation in agriculture, have continued to decline. Little wonder then that the annual growth of agriculture in the first three years of the 10th plan has been a meagre 1.5 per cent, against the target 4 per cent. |
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| Reiterating the government's commitment to agricultural reforms is welcome, but the government needs to get moving. |
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