Abolish APMC Act to control inflation, says CRISIL report

The APMC Act should be abolished and delisting of fruits and vegetables from the APMC will help lower prices and keep a check on inflation, a CRISIL research report has said.
“The APMC Act should be abolished altogether. Specifically, delisting of fruits and vegetables from the APMC can help lower prices. This will allow markets in agricultural products to develop. Farmers will get to trade freely with private buyers, the role of middlemen will be reduced and it will also incentivise private players to invest in back-end facilities. Some progress on reforming the APMC act has begun with notifications by states to delist fruits and vegetables from the Act. But these are unlikely to have a considerable impact on price till the major grower-states – Punjab, Maharashtra and Uttar Pradesh – also step up to the plate,” the report said.
It also said that the minimum support price for the cereals should be increased moderately because a sharp increase in MSP has resulted in excessive production of cereals, depletion of ground water level and led to ballooning of stocks. Thus, any further increase in MSP should be moderated.
Report said India’s granaries continue to overflow but food inflation has averaged 8.1% in the last decade, and over 10 per cent in recent times. This is despite agriculture growth surging to 3.6 per cent in the last ten years from 2.9 per cent in the decade before.
“So that thesis about food inflation being high because supply is struggling to catch up with demand has little grains of truth”.