Is the new farm trade regime fueling food inflation? -Sayantan Bera

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published Published on Sep 8, 2020   modified Modified on Sep 10, 2020

-Livemint.com

Trade moving outside regulated markets could lead to speculation and volatile prices, warn experts

NEW DELHI: After the Centre enacted a new set of laws freeing internal trade in farm produce, crop arrivals in regulated wholesale markets have witnessed a sharp decline. However, off-market transactions between farmers and traders which are going unrecorded could be fueling food inflation as traders engage in speculation and hoarding, experts said.

An analysis of numbers from wholesale regulated markets shows that in August, arrivals of most crops, from oilseeds, cereals and pulses to fruits and vegetables fell sharply year-on-year. In case of arhar, a variety of pulse, the fall in crop arrivals was a steep 53% while for chana arrivals fell by 23%. Among the most widely used perishables, arrival of potato fell by a steep 61% followed by onion (-58%) and tomato (-30%). Even arrivals of wheat and paddy fell by a staggering 54% and 31%, respectively.

The sharp fall in crop arrivals was expected since trade inside regulated wholesale markets or agriculture produce market committees (APMCs) attract 2-5% taxes levied by states. In June, the Centre brought in a new set of ordinances which allowed tax-free trade outside mandis and free movement of produce across states. It also amended the Essential Commodities Act and removed stock limits on traders.

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Livemint.com, 8 September, 2020, https://www.livemint.com/news/india/is-the-new-farm-trade-regime-fueling-food-inflation-11599565133657.html


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