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Why India Needs a Strong Regulatory Framework for Agriculture?

Synopsis: There is a need for developing a strong regulatory framework to promote India’s agricultural growth.

Introduction 

The farmers in the country face various constraints such as accessing agricultural inputs, markets, finance, human resources, and information. All these factors are critical for increasing farmers’ competitiveness.

The existing institutional structure controlling farm production fails to handle these issues. Thus, there is a need to develop a suitable regulatory system.

How did India perform in the World Bank publication, “enabling the business of agriculture”?

The World Bank recently published a report ‘Enabling the Business of Agriculture (EBA) 2019’. It measures the extent to which government regulatory systems make it easier for their farmers to operate agricultural activities. It covers 101 countries worldwide.

  • The 8 indicators of evaluation are supplying seed, registering fertilizer, securing water, registering machinery, sustaining livestock, protecting plant health, trading food, and accessing finance.
  • India ranked 49 out of 101 on the EBA aggregate score. Out of 20 emerging countries, India has the second least favourable regulatory environment for farming activities. 
  • India has the weakest performance on five out of eight indicators compared to China, Brazil, and Russia. Indicators are; registering fertilizer and machinery, securing water, sustaining livestock, and protecting plant health indicators. 
  • The comparative score of India on supplying seed, trading food, and accessing finance indicators is high. 
Why India needs a strong regulatory framework for agriculture?

Governments need to develop a regulatory framework that enables farmers’ access to agricultural inputs, reduces the cost of production, improves farmers’ participation in agricultural markets and value chains. It is important due to the following reasons: 

  1. Firstly, The regulatory system that runs irrigation management is important for reducing the inconsistency of farm output, prices, and incomes, reducing vulnerability to natural shocks, and incentivizing the production of riskier and high returns crops.
  2. Secondly, India requires a sound regulatory framework on SPS. For instance, with the active involvement of the SPS authority called as National Agrarian Health Service (SENASAPeru), Peru had become one of the world’s leading exporters of asparagus.
  3. Thirdly, a healthy seed supply system is required for improving yield and adopting new crop varieties. 
  4. Fourthly, a warehouse receipts system helps the farmers to obtain the credit needed to invest in agriculture. Warehouse receipt operators accept deposits of crops and provide warehouse receipts to farmers as evidence of deposited crops. By using warehouse receipts as security, farmers can receive credit.
  5. Lastly, Insufficient access to quality agricultural inputs such as fertilizers, water, and mechanical power can cause:
    • Productivity loss.
    • Higher cost of food production and uncertainty.
    • Lower capacity of farmers to produce surpluses.
Suggestions

The future of world agriculture and food production is expected to increasingly depend on middle-income countries such as China, India, Brazil, and Indonesia. India needs to put in place an agricultural regulatory system that would make it easier for its farmers to conduct agricultural activities. Thereby improving their productivity, competitiveness, and income.

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