Multiple problems that are present in the agri-market system in India are created by the excessive intervention of the state itself. Discuss.

The state has always been a dominant player in agriculture marketing in India, as the country is agriculture-dependent & is guided by socialist tendencies. State’s intervention is present in production, procurement, storage & distribution levels in many ways:

  • Farmers can sell their produce in notified areas and markets only.
  • There are no limits on FCI regarding procurement.
  • The government provides MSP for 23 crops.
  • Fair and remunerative prices for sugarcane, etc.
  • Most of the warehouses are state-controlled since the state is the major procurer.
  • The dual market of subsidized rates and market rates is created by PDS.
  • Cap on hoarding of essential commodities under the essential commodities act.

This intervention on all levels has given rise to many problems:

  • Skewed cropping pattern – only those crops are produced by most farmers, on which MSP is announced, like rice and wheat.
  • Regional disparities among states.
  • Despite these interventions, only 6% of farmers manage to sell their produce on MSP.
  • Stunted growth of storage infrastructure.
  • Food wastage in FCI godowns.
  • Artificial food inflation is created.

Other than this, many populist measures for electoral gains like loan waivers, free electricity, and free water have also distorted the agricultural set up in India.

Way Forward:

Instead of providing monetary external aid, the focus should be on making agriculture self-sufficient with the help of a functional cooperative culture, crop diversification, and the use of ICT tools in developing both indigenous and export markets for agriculture.


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