A National Market for Agricultural

 A National Market for Agricultural

Commodities- Some Issues and the

Way Forward

8.1 INTRODUCTION

 atpresent, markets in agricultural  out come are

regulated under the Agricultural  out come Market

Committee (APMC) Act  approve by State

Governments. There are about 2477 principal

regulated markets based on geography (the

APMCs) and 4843 sub-market yards regulated

by the respective APMCs in India.  A National Market for Agricultural

India has not one, not 29 but thousands of

agricultural markets. This Act notifies agricultural

 product produced in the region such as

cereals, pulses, edible oilseed, fruits and vegetables

and even chicken, goat, sheep, sugar, fish etc.,

and provides that first sale in these  artfact 

can be  manage only under the aegis of the

APMC through the commission agents licensed

by the APMCs set up under the Act. The typical

 convanastion available in or around the APMCs are:

auction halls, weigh bridges, godowns, shops for

retailers, canteens, roads, lights, drinking water,

police station, post-office, bore-wells,

warehouse, farmers amenity center, tanks,

Water Treatment plant, soil-testing Laboratory,

toilet blocks, etc. Various taxes, fees/charges and

cess levied on the trades conducted in the Mandis

are also notified under the Act

8.2 APMCS LEVY MULTIPLE FEES, OF

SUBSTANTIAL MAGNITUDE, THAT ARE NONTRANSPARENT, AND HENCE A SOURCE OF

POLITICAL POWER

Tables 8.1-8.3 convey a sense of the magnitudes

and  abudannce of fees arising from the operation

of the APMCs. They charge a market fee of

buyers, and they charge a licensing fee from the

commissioning agents who mediate between

buyers and farmers. They also charge small

licensing fees from a whole range of functionaries

(warehousing agents, loading agents etc.). In

addition, commissioning agents charge

commission fees on transactions between buyers

and farmers.

The levies and other market charges imposed by

states vary widely. Statutory levies/mandi tax,

VAT etc. are a major source of market distortion.

Such high level of taxes at the first level of trading

have significant cascading effects on the prices

as the commodity passes through the supplychain.

118 Economic Survey 2014-15

Table 8.1: Taxes/ Levies/Interest Charges/ Incidentals

etc.as % of MSP on procurement of Rice/

Paddy in KMS 2013-14 and price after Tax

Taxes/ Price

levies/ after

Interest tax over

Charges/ MSP

Incidentals (` 1310/

etc. (%) qtl.)

1 Andhra Pradesh* 19.5 1565.45

2 Bihar 6.5 1395.15

3 Chhattisgarh** 9.7 1437.07

4 Gujarat 3.5 1355.85

5 Haryana 11.5 1460.65

6 Jharkhand 3.5 1355.85

7 Karnataka 4 1362.4

8 Madhya Pradesh 4.7 1371.57

9 Maharashtra 3.55 1356.51

10 Odisha*** 15.5 1513.05

11 Punjab 14.5 1499.95

12 Rajasthan 3.6 1357.16

13 Uttar Pradesh 9 1427.9

14 Uttarakhand 9 1427.9

15 West Bengal 3 1349.3

* Mkt. Fee=1%, VAT=5%, Driage=1%, RD Cess= 5%