Indian Prime Minister Narendra Modi plans major farming reform

Image copyright AFP Image caption The complete series of Indian agriculture reforms has been the most contentious to pass

Indian Prime Minister Narendra Modi has announced plans to reform the country’s farm sector, which includes a complete overhaul of its key legislation.

His government will publish a new draft law this week, and will allow foreign investment in the sector.

Mr Modi said he hoped the new laws would attract investment and help farmers.

“There is space for improvement in the agriculture sector,” he said.

The new law will see the implementation of the 1991 Commodity Prices Monitoring Committee (CPMC), which monitors prices of all agricultural products, according to AgroToday.

The legislation will reduce the number of commodities covered by the Committee from nine to five. It will have control over the prices of three products – rice, wheat and sugar – which have been hotly debated.

It also aims to cut costs, and improve the quality of farming practices, states The Times of India.

“Given the ground realities and the changing scenario in the agriculture sector, it would now require a complete structural review of the industry, including the price, milk, coarse and black gram markets.”

The head of the Coalition of Indian Farmers’ Associations (CIFA), the main farmers’ pressure group, noted the reform was long overdue.

“The proposal to re-introduce multi-brand retailing of commodities was belated and this is long overdue,” he said.

The agricultural commissioner will also be empowered to declare a time-frame for the re-gradation of surplus rabi crops – the winter period for sowing – and the implementation of biotechnology products.

Image copyright AFP Image caption Prime Minister Narendra Modi says the reforms are overdue and important for rural areas

Agriculture Minister Radha Mohan Singh said all mechanisms for planting rabi, winter and summer crops would now be ensured, according to the Indian Express.

The Indian Constitution gives the government the power to fix prices for agricultural commodities, but it has rarely used the powers in the past. The law that governs the sector remains from 1991, according to AgroToday.

Farmers have been protesting the impact of high input costs for over a decade. They have demanded a hike in minimum support prices for their produce.

In the past the government has promised to do this but eventually ended up lowering their payments.

The reforms are also important for the rest of the economy, says economist, Gaurav Kapur, the director of Indirect & Macroeconomic Research at Barclays India.

“This is a great step to attract foreign investments and to allow the private sector to play a bigger role in the economy,” he said.

The World Bank in 2013 estimated the size of India’s farm sector at Rs17 trillion ($267bn). That makes up 11% of India’s economy, according to the Mint newspaper.

The reform plans are outlined in a report by the prime minister’s office, also published on Thursday.

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