NITI Aayog index is a start, but barely so
When top-ranking agricultural states like Uttar Pradesh or West Bengal don’t even figure in the list of the top five states, or 10 for that matter, in an index on farm-friendly states, it is obvious there is serious problem when it comes to agriculture reform. NITI Aayog’s index of states ranked by ‘agri marketing and farmer-friendly reforms’ is a start, and it is obvious why Maharashtra tops the list—it has just removed fruits and vegetables from the APMC list for Vashi, the country’s second-largest mandi, and the state even has a few privately-owned mandis that are doing well. But starting reforms under the APMC Act and joining the eNAM initiative—this is one of the three areas of reform the NITI index focuses on—is something that exists mostly on paper. Removing fruits and vegetables from the APMC list, as has been done in Mumbai’s Vashi and Delhi’s Azadpur mandi only helps the farmer when there are alternative markets—with the state not allotting cheap land for alternative mandis, however, farmers have no choice but to sell in the old cartelised mandis; things are better in Maharashtra but, since nothing has been done to lower mandi commissions, private mandis also manage to get away with high rates. As for the eNAM initiative, with a handful of crops brought on to the platform, just 1.6 lakh of India’s 14 crore farmers are registered on it—in no state are the major crops allowed to be traded, and they cannot since most states have restrictions on movement of agricultural produce.
The larger problem, and that is where the NITI approach falls short, is that few reforms can work in the absence of larger reform. There is no doubt that freeing up fruits and vegetables is an important reform, but the reason why farmers still prefer to grow wheat and rice is that, because the government assures prices through the minimum support price and FCI procurement, the returns here are more stable—in such a situation, FCI reform which is in the central government’s hands, and which it has ducked, are crucial. In many states, such as West Bengal which has the fifth-largest agri-GDP in India but is 19th on the NITI index, since the freedom to move farm produce across state boundaries is limited, this ensures farmers get short-changed. With few reforms taking place in the way inputs are subsidised, similarly, large farmers manage to get the most water/electricity subsidies—there is no roadmap for implementing the Shanta Kumar committee’s big reform of moving away from FCI-led marketing support to direct cash transfers to farmers which would then allow them to grow crops in accordance to what the market wants. And while direct purchases of fruits and vegetables from farmers is possible in areas like Delhi and Maharashtra since these have been removed from the APMC Act, unless FDI in retail is allowed and big players like Walmart come in, there aren’t going to be big enough buyers to be able to make a difference. NITI has made a start with its index, but the really big levers for change lie with the central government which continues to go slow on agriculture reform.