India to launch $13 billion infrastructure fund to boost agri sector; amend laws to remove obstacles to farm trade

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Photo courtesy: ADB

India’s finance Minister Nirmala Sithraman on Friday announced a massive $13.2 billion stimulus package for the the country’s beleaguered farm sector that employs nearly 60 percent of the country’s population and contributes 15 percent to its gross domestic product.

Promising to remove decades-old shackles to make it easy for farmers to earn more from their produce, Sitharaman said millions of India’s farmers needed help after being ravaged by a two-month national lockdown triggered by fear over the spread of the deadly coronavirus.

The finance minister also announced measures for the dairy sector, animal husbandry and fisheries, as the government looks to strengthen agriculture sector. “Indian farmers have always ensured that despite their smallholding, they will give high yields,” she told reporters.

Lack of adequate cold chain and post-harvest management infrastructure in the vicinity of farm-gate causing gaps in value chains have long impacted India’s farm sector, as focus has largely been on short-term crop loans while investment in long-term agriculture infrastructure has often not been enough

Sitharaman said the new financing facility will be provided for funding agriculture infrastructure projects at farm-gate and aggregation points such as primary agricultural cooperative societies, farmers producer organisations, agriculture entrepreneurs, aggregation infrastructure providers and startups.

The funding facility will be created immediately

The government will also do away with the what some call the draconian Essential Commodities Act, 1955 that was enacted in days of scarcity and doesn’t allow farmers to get a proper price realisation on their produce.

The need, the finance minister said, was to enable better price realisation for farmers by attracting investments and making agriculture sector competitive. Agriculture food stuffs including cereals, edible oils, oilseeds, pulses, onions and potato to be deregulated, and stock limit will be imposed under very exceptional circumstances such as national calamities or famine when prices end to surge.

No such stock limit shall apply to processors or value chain participant, subject to their installed capacity or to any exporter subject to the export demand, the finance minister said.

Currently, farmers are bound to sell Mandi regulated agriculture produce only to licencees, which results in hinderances to the free flow of agriculture produce, fragmentation of supply chains and markets and lower price realisation for farmers.

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