Modi Government Introduces Massive Agricultural Reform…Read, to know how good it is!

During May 2020, while the entire country was locked up due to pandemic, the Modi government came up with something called Agricultrural Reforms 2020. We are well aware that Modi government is known for its strong decisions and stringent actions. Who can think that it was this 6 year old government which repealed the Article 370, solved the Ram Janma bhoomi issue which people thought were an unsolvable crisis of the Nation.

Now let’s talk about the Agricultural reforms. To be frank, we Indians have got the perception or made to believe any reforms or bills related to Agriculture will be ANTI-FARMERS! Whether we should call ourselves ignorant or illogical is left to the readers. Because we come to a conclusion without understanding the depth of the subject or believe statements of those media house which no longer deserved to be called so.

Before getting into the details of the reforms, I would like to ask a simple question.

Consider you own a medicine manufacturing unit. What if, the government says that “you cannot sell the medicine to whom you want, where you want, what price you want and cannot stock the medicines”, but rather government will set price for your medicine and tell you where to sell and how much to sell!

 Will you be happy with the RULE??

Believe it or not, this is exactly what our farmers were facing till today. And the two draconian laws which made them do it were Essential Commodities Act (ECA)-1955 and the Agricultural Produce Marketing Committee (APMC) Act.

Firstly, the ECA was formulated 70 years back in 1955 when the country was facing massive poverty. This act said that the state had the right to control production, supply, trade, and storage of certain commodities. Which means the government could decide how much you produce, how much you store, how much you sell and at what price.

Not just that, but the government also decided to whom you sell, which dealer, which market and also restrict your transportation. The state government gave the so called authorities unimaginable powers where they could raid markets, suppliers, cancel their license, confiscate stock and also jail offenders.

The second draconian act was Agricultural Produce Marketing Committee (APMC) Act. This was another vampire which forced farmers to sell their items only in designated APMC markets and mandis. So, the farmers could only sell their products here and had to take whatever amount the government fixes for wholesale.

Who benefitted from this? It was the ministers,babus, officials, who minted huge money in the name of in inspections and raids. They threatened traders and farmers who did not relent and used all their powers to bulldoze them.

An article in Hindustan Times ( said that in 2019 alone, there was 76,000 raids on traders and famers under the ECA. Did the raids bring down stability in prices? Did farmers benefit? Did traders benefit? NO!!! But rather it made the prices of sugar, onion and pulses go high.

It only harassed the traders and made the farmers blink for support price.

Now, what did Modi government do???

They have amended the ECA and APMC acts!


Because the ECA was introduced during 1955faminecrisis, in which it classified few commodities as essential (rice, paddy, onions, potatoes, edible oils, sugar) so no trader will store these items over a limit and over a period of time. This is fair only if there is crisis, so that traders do not stock them and the commodities are available to all.

But does this act make any sense now? Obviously not, because India today is the largest exporter of rice in the world and the second-largest producer of both wheat and rice.

So when there is excess produce, it is natural for anyone to store the commodity. The price of the farm produce depends on the harvest percentage. The excess commodities are stored and supplied throughout the year which brings stability to the supply and price. But the present ECA forces the farmers to compulsorily sell their product only in the designated markets even when there is excess commodity. Anyone who has a cold storage will be called a hoarder!

So, what should the traders or farmers do?? They can neither store nor sell the items. End result, the onions or any vegetables will land in gutter or streets!

On the other hand, when there is limited supply, the prices soar sky high making the buyers cry for onions. So, if there was enough reserve commodities, don’t you think the supply and price would be stable?!

This is why, every year we witness a sudden rise in the prices of commodities and sudden drop. This is the time you will see farmers protesting for support price throwing their vegetables and fruits on streets, because they are neither allowed to sell elsewhere nor allowed to store them.

And who are those people who run APMC markets?? It is the same politicians who create artificial shortage and then suddenly rise the price. So here both farmers and the common man are the sufferers while the politicians are the gainers.

It is well known that this AMPC law was introduced by British Government to support their manufacturing sectors in UK. They made farmers grow what they want, fixed price and sold to whom they want. This is exactly why India slipped into poverty and scarcity of essential commodities.

What Amendment did govt bring to ECA and APMC?

  • From nowfarmers can sell their produce to anyone outside the APMC markets and mandis.
  • Reducedmandi fee and Cess duty of state government on APMC markets
  • National market for farmers for barrier-free inter-state trade
  • Legal framework for contract farming with assurance of fixed price to the farmers at the time of sowing.
  • Central government to seed fund Rs one lakh crore for building agriculture infrastructure (cold chains and post-harvest management infrastructure).
  • Rs 500 crore for beekeeping and Rs 500 crore for tomatoes, onions, potatoes, and other fruits and vegetables storage and supply.
  • Parallel system to move agricultural produce freely throughout country without state restrictions.
  • Agri exports to be taken out of ECA.
  • Farmers can directly deal with exporters, dealers, retailers for private investments.


So, is this not good move? Will it not benefit farmers? The Modi government has taken a bold step to reform agricultural sector as no politician will like this because it will close their INSPECTOR RAJ era and their money making business in APMC markets!

This amendment has the potential to change the agricultural market of India for ever. It will turn out to be a boon to the farmers who can raise their income many folds.

Therefore we need to understand what reform it is before we oppose everything. Yes, this is a game changer and India needs it and every agricultural economist has supported this massive reform.


Dr Aishwarya S