Economic Survey 2014-15 part 4

16)Even the model APMC act treats the APMC as an arm of the state, and the market fee as the tax levied by the state, rather than fee charged for providing services. This is a crucial provision that acts as an impediment in creating a national common market in agricultural commodities. Though the market fee is collected just like a tax, the revenue earned by the APMCs does not go to the state exchequer and hence does not require the approval of state legislature to utilize the funds so collected. Thus APMC operations are hidden from scrutiny.

17)The model APMC act retains the mandatory requirement of the buyers having to pay APMC charges even when the produce is sold directly outside the APMC area, say, to the contract sponsors or in a market set up by private individuals even though no facility provided by the APMC is used. Though the model APMC Act provide for setting up of markets by the private sector,this provision is not adequate to create competition for APMCs even within the state, since the owner of the private market will have to collect the APMC fees, for and on behalf of the APMC, from the buyers/sellers, in addition to the fee that he wants to charge for providing trading platform and other services, such as loading, unloading, grading, weighing etc.

18)Alternative ways to create national market for agricultural commodities: It may be possible to get all the states to drop fruits and vegetables from the APMC schedule of regulated commodities, this could be followed by cereals, pulse and oilseeds, and then all remaining commodities. Liberalisation of FDI in retail for improving supply chain management. Investment by the States and the centre for setting up infra and making land available etc for alternative and special markets in the private sector. There are provisions in List III of the seventh schedule(concurrent list) in the constitution which can be used by the union to enact legislation for setting up of national common market for specified agricultural commodities by overriding the state APMC laws.