ri lt re and ood ana ement 8.25
food subsidy bill. Food subsidy bill has and 4,843 sub-market yards regulated by the
increased to over 15 per cent of agri-GDP respective APMCs in India. Thus, India has not
by 2016-17 from 5 per cent of 2005-06 one, not 29 (number of states) but thousands of
(as per the Commission for Agricultural agricultural markets. This Act notifies agricultural
Costs and Prices-CACP). commodities produced in the region such as
(iv) The procurement incidentals of wheat cereals, pulses, edible oilseed, fruits and vegetables
and rice consist of costs related to mandi and even chicken, goat, sheep, sugar, fish, etc.,
charges and taxes, cost of gunny bags, and provides that first sale in these commodities
arhatiya commission, mandi labour, can be conducted only under the aegis of the
forwarding charges, internal movement, APMC through the commission agents licensed
storage charges, interest, administrative by the APMCs set up under the Act.
charges and others. Out of these costs, The typical amenities available in or around
mandi charges and taxes constitute more the APMCs are: auction halls, weigh bridges,
than 40 per cent of the total costs. godowns, shops for retailers, canteens, roads,
Opportunity cost of running the PDS lights, drinking water, police station, post-
have been very high. This is particularly due to office, bore-wells, warehouse, farmers amenity
increased levels of fund diversion for food subsidy, center, tanks, water treatment plant, soil-testing
the government could not support adequate laboratory, toilet blocks, etc. Various taxes, fees/
amount of investment in the agricultural sector. charges and cess levied on the trades conducted in
This prevented capacity building in the sector. the mandis are also notified under the Act.
Over the time, several discrepancies seeped
As per the Economic Survey 2014–15, the
into the PDS, such as,
APMCs of the states levy multiples fees of
(i) high operation costs, substantial magnitude which are non-transparent
(ii) high levels of leakages, and hence work as a source of political power. The
(iii) high administrative costs, functioning of the APMCs have always been a
(iv) corruption, and matter of debate among experts and policymakers
(v) mismanagement. alike—major issues being the following:
Subsidies created some other problems, too. They charge a market fee from buyers,
Firstly, subsidies brought distortions in the market, and they also charge a licensing fee from
which hamper the domestic as well as the external the commissioning agents who mediate
interests and secondly, caused a heavy drain on the between buyers and farmers.
government exchequer. PDS poses even higher They also charge small licensing fees
challenge when domestic or international prices from a whole range of functionaries
are on the rise and the government is forced to (warehousing agents, loading agents, etc.).
raise the MSPs of crops. In addition, commissioning agents charge
commission fees on transactions between
AGrIculture mArKetInG buyers and farmers.
India’s agrimarket is presently regulated by the The levies and other market charges vary
Agricultural Produce Market Committee (APMC) widely in the states. Statutory levies/
Act enacted by the state governments. There mandi tax, VAT, etc., are a major source
are about 2,477 principal regulated agrimarkets of market distortions.