This article provides a critical assessment of the likely impact of the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 (FPTCA). It has been argued by the government that this act will lead to transparent and barrier-free trade in agricultural produce, and that the emergence of alternative private marketing channels will result in better price realisation for farmers’ produce.
On the basis of a review of the experience of market regulation over the last seven decades and of the provisions of the FPTCA, this article argues that the regulation of agricultural markets is indispensable and needs to be made more effective. Ineffective regulation of agricultural markets results in problems such as cartelisation, interlocking sales with informal credit advances, and lack of transparency in auctions. These problems, the article argues, have their roots in inequalities of agrarian class structure and a lack of democratisation.
The article also argues that public investment in agricultural marketing has been woefully inadequate in the post-liberalisation period and needs to be considerably increased. It is unrealistic to expect that, in a period marked by an unprecedented economic crisis, the private sector can lead the development of basic infrastructure such as agricultural markets.
Finally, we argue that the low returns farmers receive from agriculture is a problem rooted in the flawed economic policies of the post-liberalisation period. Rather than solve the problem caused by the deregulation of input prices and the integration of Indian agriculture with the world market, the FPTCA is likely to aggravate the situation by weakening systems of regulated markets and public procurement.
See the monograph here.