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The Long Road to Transformation of Agricultural Markets in India

Lessons from Karnataka

Nidhi Aggarwal (nidhi@igidr.ac.in) and Sargam Jain (sargam@igidr.ac.in) are researchers at Finance Research Group, Indira Gandhi Institute of Development Research, Mumbai, and Sudha Narayanan (sudha@igidr. ac.in) is Associate Professor at IGIDR.

This paper examines Karnataka’s pioneering agricultural output marketing reforms with the twin goals of assessing the state and challenges of implementation and to glean lessons from Karnataka’s experience for India’s e-National Agriculture Market. Through a field study of 10 mandis across the state, we find that while Karnataka has been consistently pushing through with reforms, in the context of deeply entrenched relationships between farmers, traders and commission agents, there remain significant challenges. We argue, based on Karnataka’s experience, that agricultural market reform in India rests on three pillars— institutions that establish the rules of the game, incentives for agents to participate actively in the market, and infrastructure to support the modernised trading platform. Unless reforms address all these three issues simultaneously, they are unlikely to succeed.

The fi eld visit on which this work is based was supported by funding from National Commodity & Derivatives Exchange Limited. We thank Gouri Desaigouder and S Guruswamy for research assistance in the fi eld and participants at a roundtable on “Building National Agricultural Markets: Issues and Challenges” organised in New Delhi on 3 March 2016 for sharing their perspectives. This paper refl ects some of the discussions at the roundtable.

Errors and omissions that remain are ours.

Updated On : 17th Oct, 2017

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