The Centre is evaluating a proposal to bring marketing of farm goods under the Constitution’s Concurrent List, so that it has greater say on the relevant regulations and taxation.
Given the state governments’ reluctance to reform agriculture trade that impedes its efforts to empower farmers with easy access to buyers outside their states and freedom from exploitative middlemen, the Centre is evaluating a proposal to bring marketing of farm goods under the Constitution’s Concurrent List, so that it has greater say on the relevant regulations and taxation. A key objective of the change, according to official sources who requested anonymity, is to weed out sundry state-level taxes that inflate the cost of farm goods procurement by the government and private traders, even as the farmers get less-than-remunerative prices. Market fee, rural development imposts and arthia or societies’ commissions add up to 7% of the mandi prices at present, with the levies particularly high in states like Punjab, Haryana, both major grain producers. Shifting agriculture marketing to the Concurrent List, it is believed, will give a boost to electronic national agriculture market (e-NAM) which is designed to multiply the farmers’ choice of buyers.
Although the eNAM project was launched in April, 2016, hardly 5% of the wholesale trade in farm commodities has shifted to it. Iinter-mandi/inter-state eNAM trade has remained a non-starter. Of course, the official e-NAM data paint a rosier picture by adding the government’s minimum support price operations. If agriculture marketing comes under Concurrent List, the Centre’s views could prevail in case of a dispute either between itself and a state or between two or more states. “The Centre will be able to direct a state not to levy a particular fees or allow some commission,” an officials explained. The idea is to keep “other aspects” of farming in the State List and shift agriculture marketing to the Concurrent List, the official added. The agriculture ministry is learnt to have initiated inter-ministerial discussions on the proposal and the prime minister’s office is favourably inclined to approve it, the sources said. An amendment to the Constitution requires stipulated majorities in both Houses of Parliament and state Assemblies. Niti Aayog Member Ramesh Chand is believed to have submitted his inputs to the prime minister on the proposal. However, when contacted, Chand denied having made a suggestion to the PMO to bring agriculture marketing under concurrent list. In October last year, Chand had written a letter to DMK leader M K Stalin after he criticised the idea of bringing the agriculture marketing under concurrent list, saying it was against the spirit of cooperative federalism. To check price distortion in farm commodities, there is a need to undertake marketing reforms in agriculture.
The farmers need to have more windows to sell their produce so that they can refuse to sell if they are not satisfied with a price quoted. Currently, farmers are forced to sell at the mandi close to them and more often than not, at the rates decided by traders. Taxes collected by states on agriculture commodities which vary from one state to another. If levies are higher in one state, traders offer lower price to farmers just to enable the produce to be sold in other states where the taxes are lower. The goods and services tax (GST), under which most (unprocessed) food items are exempt, has reduced the tax incidence on grains and other food items in the country. It has corrected the wide disparities in the tax incidences even among major grain-producing states like Punjab, Haryana, Uttar Pradesh and Madhya Pradesh. However, small levies like market fee, rural development fee and arthia or societies’ commissions are being paid by grain buyers.
Millers of Punjab, for instance, buy wheat from Uttar Pradesh, where the taxes are lower, even as Punjab has been producing the grain in surplus quantities. The Ashok Dalwai committee on doubling farmers’ income has recommnded that the concept of one-India market may benefit if agricultural marketing is brought under the Concurrent List. While cultivation is limited to the land and area of farming operations, marketing has no boundaries and needs to operate on a pan-India level to meet demand across the country, it said in a report released in August last year. “Future marketing intervention by the State governments need to be align with the One-nation, One-market concept by laying greater emphasis on long term connectivity for agricultural produce, across states and geographies,” the Dalwai committee said.