Farm panel makes pitch for common mkt

The national commission on farmers (NCF) has recommended the creation of a single market for farm produce by removing all the remaining controls and barriers in inter-state movement of goods and changing the marketing laws.

The commission, headed by noted agricultural expert MS Swaminathan, said in its third report to the government recently that all laws and norms for regulating stocking, marketing and movement of farm produce and for safeguarding consumer interests had outlived their utility and needed to be amended or scrapped.

The economy has moved away from shortages and scarcities and the agriculture sector is now capable of generating employment. "However, the need is to unchain this sector," the NCF report said.

It said the curbs and controls imposed in the past had led to the breaking up of the vast Indian market into a large number of smaller regional markets.

The paperwork involved in complying with various controls, regulations and licences involved costs and was time-consuming. It also bred corruption and served as a big drag on the efficiency of trading operations in the country.

The report pointed out that state-imposed barriers, complex tax structure and permit system for transport operators lead to their harassment at various checkpoints and impaired marketing efficiency.

The regulated marketing systems that offered no choice to farmers on market-related issues and high marketing charges, including cess of various kinds, added to marketing costs and farmers' dissatisfaction.

"Inadequate storage facilities in rural areas and non-availability of pledge finance leads to distress sales where spot payment means a discount of 15 to 20 per cent on the price," it pointed out.

The NCF has suggested that the Essential Commodities Act 1955 should be kept under suspended animation. Or else, all the commodities declared essential under it be removed from its purview.

Similarly, the Prevention of Food Adulteration Act 1954, the Food Processing Order, the Weights and Measures Act and several other such laws and orders currently in operation had become outdated.

The NCF expressed hope that the Food Safety Standards Bill (2005), currently under consideration, would take care of this aspect.

Calling for removal of internal indirect taxes on farm products, the NCF said they decreased the prices received by farmers and increased the prices paid by consumers.

"As farm incomes lag behind average Indian incomes and the poorest sections of non-farm society spend the highest proportion of the income on food, the indirect taxes applied to food products are doubly regressive," the NCF.

It pointed out that the removal of these taxes would tend to make the Indian agricultural products more competitive in the export market.

The commission favoured the replacement of state-level value added tax (VAT) with a central VAT throughout the country.

It also favoured amendment of the agricultural produce marketing committee (APMC) Acts of states and introduction of greater transparency in the marketing of farm produce.

Besides, it recommended total removal of market fee on primary agricultural commodities and merger of charges on services like loading, unloading and weighing into a consolidated service charge for the use of market infrastructure.

Since many of the suggestions made by the NCF might result in a loss of revenue to states, it suggested that the matters related to compensation be referred to the Finance Commission, which could suggest methods by which the single market might become a win-win situation for all.