India’s regulated farm markets
The government claims that the new laws are meant to raise farmers’ incomes and transform Indian agriculture. According to the government, they will also end “excessive regulatory interference” and thereby encourage the private sector to invest in storage, transportation and other parts of the agriculture supply chain. The laws will, officials say, offer farmers the opportunity to market their produce to various groups of buyers – processors, retailers, exporters and so on.
In the past, the Indian government has played a major role in providing farm infrastructure in India.
In response to persistent food insecurity in the 1960s, the government put in place a set of policies that would increase agricultural production through the use of inputs such as high-yielding seeds, chemical fertilizers and adequate water and electricity supply.
On the demand side, the government bought grain and other commodities from the farmers, guaranteeing floor prices, and then distributed the food to consumers throughout the country.
To maintain price stability and to protect farmers from being ripped off by middlemen, the government created regulated markets. These policies, which began within two decades of India’s independence in 1947, were consistent with the socialist model of governance India had adopted.
However, according to experts, these regulated markets, created to protect farmers, emerged as obstacles to growth in the farm sector.