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<ul><li>Citing the example of other industries where there are no restrictions on how producers sell their products, Finance Minister Nirmala Sitharaman said that farmers should have the choice to sell their produce at attractive prices. </li><li>To this end, Sitharaman said that the government will formulate a central law that will provide barrier-free inter-state trade, along with a framework for online trading of agricultural produce. </li><li>However, for this to pass muster, the government will have to garner support from the opposition parties and farmer bodies, who think APMCs are needed to ensure farmers get a good price for their produce. </li></ul>The Modi government is using COVID-19 crisis to push through the <keyword id="6366428" type="UNKNOWN" weightage="20" keywordseo="APMC">APMC</keyword> reforms it has been talking about for a long time. Finance Minister Nirmala Sitharaman made the announcement in the third tranche of the Covid-19 stimulus package today, May 15. Making the announcement, Sitharaman said that this move will give the choice to sell their produce at attractive prices, instead of being tied down to their local APMCs (Agriculture Produce Market Committee). “When you create competition for farmers’ produce, the price improves. There are more buyers, more choices. Farmers will get the benefits of that. Whether you have one buyer or ten buyers for a service makes a difference,” said Ashok Gulati, former chairman of the Commission for Agricultural Costs and Prices. <div type="Article" hostid="261" msid="75756781" title="These are the top takeaways from Finance Minister Nirmala Sitharaman's third installment from Modi's ₹20 lakh crore stimulus" mstype="2" mssubtype="0"></div> APMC reforms might hit a roadblock in non-BJP ruled states Modi has been batting for APMC reforms for a long time now. “It is imperative to swiftly undertake market reforms of our decades old and restricted agriculture produce and marketing committee (APMC) architecture,” PM Modi <a href="https://www.livemint.com/Politics/M6HMO4jTZrn1iwwbypaEbL/Narendra-Modi-calls-for-swift-APMC-reforms-to-benefit-farmer.html">said</a> in a letter to Chief Ministers in 2018. However, these reforms might hit a roadblock in non-BJP ruled states. “The APMCs have existed since 1963 and there is a good reason they have been around for such a long time. Reform is welcome but it cannot endanger an existing structure. Our party will oppose this proposal if and when it comes before the legislature," a NCP leader was quoted as saying by <a href="https://www.livemint.com/Politics/reRgHJ4NW4Sl4EJMXRyzHJ/APMC-reforms-in-Maharashtra-hit-a-roadblock.html">Livemint</a>. Those who favour the existing APMC structure <a href="https://timesofindia.indiatimes.com/city/mysuru/farmers-oppose-proposed-amendment-to-apmc-act/articleshow/75744758.cms">argue</a> that diluting APMC reforms will give power to multinational companies and corporates. They are also concerned about minimum support price guarantee, without price regulation in place. So far, only BJP-ruled states like Gujarat, Madhya Pradesh and Uttar Pradesh have passed APMC reforms. The Karnataka government issued an ordinance, but it was <a href="https://timesofindia.indiatimes.com/city/bengaluru/bengaluru-governor-returns-apmc-reforms-ordinance/articleshow/75729589.cms">returned</a> by the state governor earlier today. Sitharaman says the changes will empower farmers Making the announcement, Sitharaman said that farmers should have the freedom of choice to sell their agricultural produce at attractive prices. Further, she said that no other industry restricts producers from selling their product to whomever they want, and at their desired prices. To solve this problem, Sitharaman said that the central government is working on a law. This will remove barriers to inter-state trade and allow farmers to sell their produce to the highest bidder, which should result in increasing their incomes. Apart from this, she also said that a framework for online trading of agricultural produce will also be worked upon. It is likely that this framework will be on the lines of e-NAM, which is a national agriculture market with an online trading platform for farmers. What’s wrong with APMCs? APMCs were set up with the intention to increase farmers’ incomes by making it easier to sell their produce without having to deal with commission agents. However, the government criminalised setting up of competing markets in the same area, essentially creating a monopoly in the form of APMCs. This led to traders forming cartels to artificially lower prices of the agriculture produce they buy from farmers. A 2012 <a href="https://www.cci.gov.in/sites/default/files/AO.pdf">report</a> by the Competition Commission of India cites the example of a visit to Ahmednagar APMC which revealed collusion among traders. These traders then sell the produce at higher prices to end consumers. While APMCs were formed to benefit farmers, it’s the traders who end up milking both farmers as well as consumers. See also: <a href="https://www.businessinsider.in/india/news/essential-commodities-act-to-deregulate-price-of-potatoes-onions-and-pulses/articleshow/75758676.cms">India proposes to deregulate prices of onions, potatoes, pulses and other essential food — prices won’t be capped and one can store as much as needed</a> <a href="https://www.businessinsider.in/politics/policy/news/what-is-essential-commodities-act-that-nirmala-sitharaman-wants-to-amend/articleshow/75759156.cms">What is the Essential Commodities Act – the 65-year old act that FM Nirmala Sitharaman said will now be amended</a>

Modi is using the COVID-19 crisis to push through APMC reforms he has wanted for long⁠— but states may oppose

<ul><li>Finance Minister Nirmala Sitharaman has hit pause on filing <keyword id="9235757" type="UNKNOWN" weightage="20" keywordseo="fresh-insolvency-cases">fresh insolvency cases</keyword> for the next one year.</li><li>The minimum threshold for initiating proceedings has also been increased from ₹1 lakh to ₹1 crore.</li><li> Any debt that arose due to the impact of coronavirus won’t be categorised at ‘default’ under the Insolvency and Bankruptcy Code (IBC).</li></ul>"Any indebted situation that comes up because of coronavirus will not be considered as ‘default’ and no fresh insolvency proceedings will be initiated for the next one year," Finance Minister Nirmala Sitharaman said while unveiling the fifth and final tranche of reforms to fight the impact of COVID-19 pandemic on the economy. This means for the defaults that happen in the next few months cannot be called non-performing assets (NPA), simply put a bad loan. “At the moment, I think, the MCA has extended it to six months, we intend to increase it by another six months because even once the lockdown lifts, immediately after, you’re not sure how much of business will be restored,” Sitharaman explained. A special insolvency framework will be notified under Section 240 A of the Insolvency and Bankruptcy Act. These measures will be enforced via ordinance and then later taken to Parliament for approval. The total NPA for India’s banking industry is at ₹7.27 lakh crore, the government said on February 2020. There was a fear of a massive spike in bad loans due to the economic crash caused by the pandemic and the lockdown to contain it. ICICI Securities had expected a 50% jump in gross NPA as nearly ₹2 in every five rupees lent by the banking sector went to “high and medium risk segments”. “We expect credit cost to rise 2.3% and earnings to decline 18%,” the report dated May 13 concluded, ahead of the announcements made by Sitharaman. The latest decisions will improve the prospects for both banks and non-banking financial institutions. A special insolvency framework will be notified under Section 240 A of the Insolvency and Bankruptcy Act. Not just big businesses, even small businesses shielded The minimum threshold to initiate proceedings has been raised from ₹1 lakh to ₹1 crore to insulate MSMEs. “This is a major step forward, and in all probability, we’ll be going through an ordinance to achieve this goal immediately. Of course, we’ll go back to it, once the parliament commences, to have it passed as an act,” she said. Nearly 10% of all loans made by State Bank of India (SBI), India’s largest bank, are to MSMEs whereas in the case of Axis Bank the proportion is about 7.5%, according to a recent Edelweiss report dated May 13. The reduced risk of NPAs is likely to boost these stocks when the market opens on Monday, May 18. “However, the responsibility for businesses to use this time to stabilize and improve functioning will squarely be there with onus to put better mechanisms for internal governance as creditors would have to forbear an important right during this period of suspension of IBC for a year,” said Kumar Saurabh Singh, a partner at law firm Khaitan and Co. Further, the government decision to reduce the number of central government owned companies will also boost the market sentiment. While it is not clear if banks will be part of the notified list of strategic sectors, the Modi government’s existing stance is to merge public-sector banks and to reduce their number. SEE ALSO: <a href="https://www.businessinsider.in/policy/economy/news/finance-minister-nirmala-sitharaman-final-stimulus-plan-to-boost-gdp-of-india/articleshow/75784571.cms">India's Finance Minister reveals the final lot of Modi's economic stimulus programme</a> <a href="https://www.businessinsider.in/policy/economy/ashok-gulati-interview-on-essential-commodities-act-and-apmc-changes/articleshow/75760364.cms">"I have been asking for this for 20 years," says Ashok Gulati, agriculture scientist ⁠— cheering the changes to Essential Commodities Act and APMC</a> <a href="https://www.businessinsider.in/science/space/news/lt-and-godrej-join-like-boeing-and-lockheed-martin-ula-after-biggest-space-reform/articleshow/75778037.cms">"Now, L&amp;T and Godrej can join hands like Boeing and Lockheed Martin’s ULA," says Gateway House scholar cheering India’s 'biggest space reform'</a>

India puts a pause on new bankruptcy cases for a year ⁠— and other changes that will cap the rise in bad loans

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Modi is using the COVID-19 crisis to push through APMC reforms he has wanted for long⁠— but states may oppose

Rounak Jain

India puts a pause on new bankruptcy cases for a year ⁠— and other changes that will cap the rise in bad loans

Prabhjote Gill

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