UPSC Mains 2014 GS Paper 3 Q3: model answer
There is also a point of view that Agricultural Produce Market Committees (APMCs) set up under the State Acts have not only impeded the development of agriculture but also have been the cause of food inflation in India. Critically examine.
What the question wants
Critically examine the view that APMCs under state laws have held back agriculture and fuelled food inflation.
How to structure it
The view, the evidence, the defence, the reform.
- What APMCs are
- How they impede agriculture
- How they feed inflation
- The other side
- Reforms
How to think it through
APMCs were set up from the 1960s to protect farmers from traders. Over time: licensed trader cartels, commissions and cess, few mandis (one per about 400 sq km against the 80 sq km norm), farmers forced to sell in notified markets. Inflation: multiple intermediaries, hoarding, price spread. Defence: regulated markets, payment security, price discovery. Reforms: Model APMC Act 2003, Model APLM Act 2017, e-NAM, 2020 farm laws (repealed 2021).
Model answer
In 2013 onion prices in Delhi touched ₹100 a kg while farmers in Lasalgaon sold for a fraction of it. The gap went largely to traders licensed by Agricultural Produce Market Committees (APMCs).
How APMCs impede agriculture
- Compulsory sale in notified markets in many states; farmers could not sell directly.
- Licensed cartels: few traders, closed licences, collusion in auctions.
- High charges: market fee, commission and cess of up to 8–10% in some states.
- Too few markets: one regulated mandi per about 400 sq km against the 80 sq km benchmark.
- Delayed payment and poor facilities for grading and storage.
How they feed food inflation
- Many intermediaries add margins, so the farmer's share of the consumer rupee is low.
- Hoarding by licensed traders in times of shortage.
- Fragmented markets prevent produce moving from surplus to deficit regions.
The other side
- APMCs replaced exploitative village moneylender-traders.
- Regulated auctions and payment security still protect farmers in many places.
- Inflation also comes from supply shocks, weak storage and the weather.
- Bihar abolished its APMC Act in 2006, yet its farmers did not get better prices, because private markets did not come up.
Reforms
- Model APMC Act 2003 and Model APLM Act 2017; e-NAM (2016).
- The 2020 farm laws tried to open trade outside mandis but were repealed in November 2021.
APMCs are not the only cause of high food prices, but reforming them is part of any cure.
Draw: A rupee bar: farmer's share vs intermediaries' share for onions.
Keywords, cases and data to drop in
APMC Acts, market fee and commission, licence raj in mandis, price spread, Model APMC Act 2003, Model APLM Act 2017, e-NAM, farm laws 2020 repealed, Lasalgaon.
Where most answers lose marks
- Agreeing fully. 'Critically examine' needs the defence of APMCs and other causes of inflation.
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Question text as printed in the official UPSC Civil Services (Main) question paper. The model answer is original Battle IAS work; use it to learn structure, not to memorise.
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