Home >Politics >News >Government turns its focus on rural economy as India unlocks
Amendments to ESA will promote barrier-free inter-state and intra-state trade in agriculture produce and allow farmers to directly engage with processors, aggregators, wholesalers, large retailers and exporters. (Photo: Ramesh Pathania/Mint)
Amendments to ESA will promote barrier-free inter-state and intra-state trade in agriculture produce and allow farmers to directly engage with processors, aggregators, wholesalers, large retailers and exporters. (Photo: Ramesh Pathania/Mint)

Government turns its focus on rural economy as India unlocks

  • The Centre feels the move will help promote freedom to produce, hold, move, distribute and supply
  • The move is politically significant as it may be resisted by states ruled by Opposition parties

NEW DELHI : The Prime Minister Narendra Modi-led Union government on Wednesday announced the amendment of the Essential Commodities Act (ECA), as part of a series of steps to revive the rural economy, which was severely impacted by the coronavirus outbreak and the more than two-month-long lockdown imposed to control its spread.

The move will help promote freedom to produce, hold, move, distribute and supply and attract the private sector, as well as foreign direct investment, in agriculture, the Union government feels.

The move is politically significant not just because the Union government aims to address distress in the rural sector by making institutional changes, but also because it could get a pushback from states over agrarian distress, particularly those under opposition governments, experts said.

“Cabinet decisions will have a very positive impact on rural India, especially our industrious farmers. Long-pending agrarian reforms will enable the transformation of the sector," Modi tweeted soon after the decision.

A few states, which have Bharatiya Janata Party (BJP) governments, have already announced the steps taken by the Union government at the national level. These include Uttar Pradesh, Karnataka, Gujarat and Madhya Pradesh, which have given farmers the freedom to sell their produce to an entity of their choice by amending the Agricultural Produce Marketing Committee (APMC) Act.

“Through this ordinance, the Union government’s attempt is to free farmers from the regulations they were bound by. Mandis will stay. The APMC Act of states will stay but in areas outside of its purview, even if it is a farmer’s house, any company, organization, processing industry can go and buy their produce at optimum price…no tax will be imposed on it," Union agriculture minister Narendra Singh Tomar said at a press conference.

The amendments to the ESA will promote barrier-free inter-state as well as intra-state trade in agriculture produce and allow farmers to directly engage with processors, aggregators, wholesalers, large retailers and exporters.

The Union government’s push for “One India, One Agriculture Market" has come at a time when the rural economy has been hit not just by pandemic, which has also led to a reverse migration by lakhs of migrants particularly in states such as Uttar Pradesh, Bihar, and Jharkhand triggering demand for more local employment.

“The Union government is trying to open up the process for all farmers. After the push for One Nation, One Ration Card, the proposed amendments to ECA also point to the larger trend of creating a unified approach towards agriculture. Some of the proposals, including allowing inter and intra state trade, have been demanded for long, but there is bound to be pushback from some of state governments that have an alternative point of view," said Yatindra Singh Sisodia, director at the Madhya Pradesh Institute of Social Science Research, Ujjain, and a political analyst.

“It is politically significant because the Union government is aware of the havoc that the pandemic has created and is looking for key interventions to tackle it," Sisodia said. State elections in Bihar and West Bengal are also a key concern, Sisodia said.

The decision is also significant because the BJP will also face Assembly election in Uttar Pradesh in 2022, which has considerable number of farmers. The party has made an election promise of doubling the income of farmers by 2022.

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