Nearly 330 million people have been suffering from a devastating drought brought on by two years of weak monsoons in India. The drought brings into sharp focus how India protects itself from natural disasters and other concerns related to agricultural reform. As the drought wreaks havoc on crop forecasts, prime minister Narenda Modi is pushing forward with plans to modernise how farmers sell their produce.
In India, wholesale marketplaces called mandis are the central areas where farmers sell their crops. Mandis act as intermediaries between markets and farmers. Over the years, however, mandis have transformed from places where farmers were protected into hives of corruption where middlemen profit through exorbitant commissions and fees.
Individuals and retailers cannot buy directly from mandis. For that one needs a licence that is seldom granted. Moreover, the licence for one mandi does not entitle the holder to trade in another mandi, even if both are in the same state. The result is an endemic lack of transparency that is hurting the Indian economy.
Mr Modi’s plan is a simple one that will bring about a great deal of sophistication to the Indian marketplace. By moving the mandi system online, farmers will be freed from the reach of corrupt middle men. Farmers will be able to gauge fair market price for their crops and be able to easily identify the best buyers. The e-mandi initiative will roll out in eight states in its first phase but there are plans to extend across the country. And it is not limited to crops. Farmers will be able to list any item they want to sell, including agricultural tools.
While the transactions on e-mandis will still involve fees, they will be listed in a transparent manner and subject to governmental oversight. This is a step in the right direction. Giving farmers more freedom to get the best prices for their goods will increase healthy competition that will raise the level of production across the country. India’s agriculture sector is in need of more such reforms.
