Achievement of Market Integration in India

Market integration and price transmission, in the case of a large producing and consuming country like India; depend on the geographical dispersion or concentration of production.

A shared online market platform for agriculture commodities:

While consumers are spread throughout the country, the production and marketed surplus is less spread out, particularly for agricultural commodities. If agricultural markets are not integrated, then any local food scarcity will tend to persist, as distant markets where surplus stock is available, will not be able to respond to the price signals of such isolated markets. Lack of integration can often lead to localized food scarcity, even famines.

Presently, markets in agricultural products are regulated under the Agricultural Produce Market. Committee (APMC) Act enacted by the Government. APMC is a system operating under the State Government since agricultural marketing is a State subject.  APMCs have Yards/Mandis in the market area that regulate the notified agricultural produce and livestock.

The National Agriculture Market (e-NAM) is a pan-India electronic trading system launched on April 14, 2016. E-NAM connects current Agricultural Produce Market Committee (APMC) mandis to form a unified national market for agricultural commodities. It is entirely supported by the Central Government and is managed by the Small Farmers Agribusiness Consortium (SFAC), which is overseen by the Ministry of Agriculture and Farmers’ Welfare.

Integration of APMCs across the country via a shared online market platform ensured to promotion of pan-India commerce in agricultural commodities, better price discovery through a transparent auction procedure based on produce quality, and prompt online payment.

Market coupling of Power exchanges

The Central Electricity Regulatory Authority (CERC) initiated the process of coupling multiple power exchanges, a mechanism that seeks to ensure uniformity in price discovery of energy at trading platforms.

Market coupling is a model where buy bids and sell bids from all power exchanges in the country will be aggregated and matched to discover a uniform MCP. It means there will be only one price for the electricity that is to be traded at any point in time through the exchanges.

Power exchange is not the market but a host to the market. A Power Exchange is a platform on which power is transacted i.e. bought and sold. Trading happens for Day Ahead, Day Ahead Contingency, Any Day, Intra Day, and Weekly Contracts.

At present India has three power exchanges — Indian Electricity Exchange (IEX), Power Exchange of India (PXIL), and Hindustan Power Exchange (HPX).In the present scenario, buyers and sellers at each exchange do trading of electricity and discover spot prices separately at these exchanges. After the coupling of exchanges, the price discovery would be uniform.

In the Indian context, the objectives of market coupling are largely fulfilled, as all regions are already geographically integrated, utilizing a common transmission infrastructure efficiently. Introducing a centralized market setup with a single entity or MCO would come at a cost in terms of time and resources.

Integration of Technology:

Technology has reduced the speed of communication manifolds. The phenomenon of social media in the recent world has made distance insignificant. The integration of technology in India has transformed jobs that required specialized skills and lacked decision-making skills into extensively defined jobs with higher accountability that require new skills, such as numerical, analytical, communication, and interactive skills. As a result of this, more job opportunities are created for people.

Integrated transport system:

An integrated transport system refers to a multi-modal transport system where different modes of transport like roads, railways, ports, coastal shipping, inland water, and civil aviation are efficiently linked with each other. These transport modes are expected to complement one another by functioning together as a single important transport system.

The Planning Commission of India set up a Task Force in 2001 on Integrated Transport Policy to develop various modes of transport that would lead to an efficient, sustainable, safe, and regionally balanced transportation system. The Integrated transport system deals in best practice methodologies, managing physical and operating with the needed skills for better performance in which each mode is interconnected and the connection is highly unified including ticketing, and scheduling, amongst others.

The importance of ‘integrated transport solutions’ as against ‘individual transportation and distribution services’ is brought forth by the Planning Commission’s Report of the Working Group on Logistics, 2010-11. The report emphasises the important role of containerisation in the movement of cargo through a multi-modal transport system, by reducing overall costs and improving cost competitiveness. The low share of containerised tonnage as a proportion of total traffic handled by Indian ports and of total domestic traffic carried by railways during 2008-09 at 14.32 per cent and 20 per cent, respectively, is ascribed to the costly and inadequate delivery systems.

Intermodal transport which involves the use of both rail and road is known as combined transport.

In terms of the economy, railways played a major role in integrating markets and increasing trade. Railways in India bind the economic life of the country as well as accelerate the development of industry and agriculture. Railways are the principal mode of transportation for freight and passengers in India.

Road Transport is considered to be one of the most cost-effective and preferred modes of transport, both for freight and passengers, keeping in view its level of penetration into populated areas. Thus, it is vital for economic development and social integration in the country. Road Transport has emerged as the dominant segment in India’s transportation sector with a share of 4.5% in India’s GDP in 2005-06. The Road Transport Sector accounts for about 87% of passenger traffic and 60% of freight traffic movement in the country. Easy availability, adaptability to individual needs, and cost savings are some of the factors which go in favour of road transport. Road transport also acts as a feeder service to the railway, shipping, and air traffic.

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