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Summary

Economics Class 42

## AGRICULTURE MARKETING (05:02 PM)

- Advance agriculture marketing is required to supply excess production and also increase the income of farmers.
- Approximately 33% of the **output of food grains,**pulses, and cash crops like cotton, oil seeds, etc. is marketed as they remain surplus after meeting the **consumption needs of the farmers.**
- Increasing the efficiency of marketing would result in the distribution of products at **lower prices to consumers,** having a direct bearing on national income, and an **improved marketing system would stimulate growth** in the number of **agro-based industries,** mainly in the field of food processing.
- **History of agromarketing in India:**
- For a long time, a traditional marketing system existed in India.
- It was characterised by village sales of agro-commodities, post-harvest immediate sales by farmers, etc.
- In 1928, the **Royal Commission pointed out** the problems of **traditional marketing,** like high marketing costs, unauthorised reductions, and the prevalence of various malpractices.
- This led to a demand for regulated markets in India.
- **Regulated Markets:**
- It aims at the elimination of unhealthy and unscrupulous practices, reducing marketing costs, and providing benefits to producers as well as sellers in the market.
- After independence, most of the states enacted the **agri-produce market Regulation Act.**
- It authorises states to set up and regulate marketing practices in wholesale markets.
- The objective was to ensure that the farmers got a fair price for their produce.
- However, **regulated markets had the following drawbacks**:
- 1. Under this regulation, no exporter or processor could buy directly from the farmers, which discourages the processing and exporting of agricultural products.
- 2. Under the Act, the state could only set up markets, thus preventing private players from setting up markets and investing in marketing infrastructure.
- 3. The formation**of cartels**with links to caste and politics makes the system inefficient.
- 4. An increased number of middlemen formed a virtual barrier between the farmer and the consumer.
- 5. The licencing of commission agents in the state-regulated market has led to a monopoly of **licenced traders,** acting as a major entry barrier for new entrepreneurs.
- 6. The fragmentation of the markets within the state hinders the free flow of agro-commodities from one market area to another, and multiple levels of **Mandi charges**end up escalating the prices for the consumers without adequate benefits for the farmers.

## MODEL APMC (AGRICULTURE PRODUCE MARKETING ACT), 2003 (05:58 PM)

- As per the Act, the state is divided into several market areas, each of which is administered by a separate APMC that imposes its own marketing regulations, including fees.
- Producers and **local authorities** are permitted to apply for the establishment of new markets for agri-produce in any area.
- Provision for contract farming and allowing direct sales of farm produce.
- Single point levy of market fees on the sale of **notified agricultural commodities** in any market area.
- Separate provision is made for notification of special markets in any market area for specified agricultural commodities.
- It provides for the creation of marketing infrastructure from the revenue earned by the APMC.
- Provision is made for resolving disputes in the private market.

## e-NAM (06:21 PM)

- It is an **online trading platform**for agricultural produce, aiming to help farmers, traders, and buyers through online trading and increasing transparency.
- The Small Farmers' Agribusiness Consortium is the lead agency for implementing e-NAM under the **Ministry of Agriculture and Farmer's Welfare.**
- **Need for e-NAM:**
- Every state has its own APMC act with varied provisions, and every state is further divided into several market areas that are separately administered by **respective APMCs.**
- This fragmentation of markets, even at the state level, hinders the free flow of agricultural commodities between different markets.
- Multiple handlings of agriproducts and multiple levels of mandi charges led to higher prices for consumers without adequate benefits for farmers.
- These challenges are addressed by e-NAM by creating a unified market for online trading platforms both at the state and national levels.
- e-NAM mandates three changes in the agriculture marketing laws of the state:
- 1. Providing for electronic trading
- 2. Providing a single trading licence that is valid in all mandis.
- 3. Providing a **single window levy on transaction fees**
- **Salient features:**
- 1. The e-NAM portal will enable farmers to showcase their products through their nearby Mandis and facilitate traders from anywhere to quote the price.
- 2. e-NAM provides a **single window service** for all APMC-related services, including **commodity arrivals, quality, prices, buy and sell offers, and e-payment settlement** directly into the farmers' account.
- **Benefits:**
- 1. **Transparent online trading**
- 2. Real-time **price discovery**
- **3. Better price realization** for the product
- 4. Reduce **transaction costs for the buyer.**
- 5. Stable price and availability for consumers
- 6. Payment and delivery guarantee
- 7. Error-free reporting of transactions

## HOW TO MAKE NOTES (06:38 PM)

- Reference: Toppers copy
- Read all the PYQs and answers.

## EXTERNAL SECTORS (7:11 PM)

## Balance of Payment (BoP)

- It is an **accounting statement** that records the **economic transactions** of **residents of the country with the rest of the world in one financial year.**
- **The economic transaction includes:**
- Visible items (BoT);
- Unilateral transfers (one-sided transfer without returns)
- Factor Income
- Services
- Capital-related aspects.
- BoP is a **double-entry accounting system where** debits and credit transactions are recorded.
- BoP of a country is further divided into two parts, according to the nature of transaction: Balance in Current account and Balance in Capital Account
- In double entry system of accounting-All inflows are credited (positive), and all outflows are debited (negative) under BoP.
- Credit items include exports, receivable income, transfer receipts, reductions in foreign assets, and increases in foreign liabilities.
- Debit items include imports, payable income, transfer payments, and increases in foreign assets or decrease in Foreign liabilities.
- |  |  |
  | --- | --- |
  | **Debit** | **Credit** |
  | Import (Goods) | Export (Goods) |
  | Unilateral transfers to abroad | Unilateral transfers from abroad |
  | services received from abroad | Services to abroad |
  | Factor Income to abroad | Factor Income from abroad |

## TOPIC FOR THE NEXT CLASS: WILL CONTINUE WITH THE EXTERNAL SECTOR