Govt to use MNREGS, soft loans to build 22k agricultural markets

The government will use a mixed funding pattern involving the Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) and subsidised loans to develop 22,000 agricultural markets as part of its strategy to fulfil one of the key rural initiatives spelt out in the Union budget.

These new markets, essentially village ‘haats’, will serve as aggregation points and increase the number of selling points where farmers can bring their produce with minimal rules. The aim is to provide an alternative to rigged farm-to-fork supply chains that drive down farmers’ profits.

HT had reported on March 12 that the agriculture ministry and the finance ministry-administered National Bank for Agriculture and Rural Development (Nabard) have both pitched proposals with differing approaches to set up these markets. While Nabard proposed loans at subsidised interest to panchayats and sought Rs 360 crore for the purpose, the agriculture ministry wanted to utilise money available under existing schemes to partially fund the project.

A part of the fund will also be used to modernise the middlemen-controlled agricultural produce market committees (APMCs). The new markets are expected to be kept outside the APMC system in a bid to liberalise farm trade.

“There are no differences. We will now send a revised proposal that will take a convergence approach,” M Thangaraj, the agriculture ministry’s joint agricultural marketing advisor, said.

The “convergence” approach provides for the merger of proposals touted by both Nabard and the agriculture ministry, and the establishment of a mixed funding pattern. Part of the funds will be drawn from MNREGS provisions.

According to initial projections, each market will need Rs 20 lakh. In most of these, half the amount will come as soft loans to panchayats. In markets where some facilities have already been built, the loan amount will be Rs 7.5 lakh.

The remaining funding will come from 17 different components of central sector schemes.

Ahead of the 2019 general elections, the Narendra Modi government is seeking to address widespread farm distress caused by a recent decline in agricultural commodity prices. The proposed markets are a part of the efforts for which the latest budget has created a Rs 2,000-crore agri-market infrastructure fund.

The Dalwai committee formed to suggest measures to double farm incomes has proposed “placing agricultural marketing under the Concurrent List (in the Seventh Schedule of the Constitution)”. This will enable both the Centre and states to legislate on the subject, which currently falls squarely in the states’ domain.