Is the vituperative narrative against the farm laws being driven by unfounded apprehensions, half-truths and far-fetched conspiracy theories, with political calculations playing the catalyst?
The maximalist position adopted by the farmers’ leaders in the face of the comprehensive amendments to the farm laws proposed by the government on 9 December, is hard to understand. With tempers running high, the purpose of the protest has receded to the background, being replaced by extraneous issues and a vindictive urge among some leaders of the agitation to humble the government into a scrapping of laws passed by Parliament. Exacerbating the situation is the Opposition and vested interests.
Are these farm laws so farmer averse to warrant this strident backlash? Or is this vituperative narrative being driven by unfounded apprehensions, half-truths and far-fetched conspiracy theories, with political calculations playing the catalyst? Before we analyse the farm laws for their merits and demerits, we need to start with a bird’s eye view of agriculture.
Agriculture in India occupies the prime place. Despite a steady attrition in the numbers engaged in agriculture over the years, it remains a formidable employer, accounting for nearly 42% of the total workforce (2020) and contributing to 15.96% of the GDP (2019). Nevertheless, the agrarian sector remains a dysfunctional entity plagued by myriads of issues and unpredictability dependent on climatic vagaries for its success. As per the Economic Survey 2019-2020, the average annual growth rate in real terms in agriculture as well as its allied sectors has remained static in the last six years, leading to a negative impact on farmers’ incomes.
Below are some data that reflect the poor plight of the Indian farmer:
- The Niti Aayog in its report, “Doubling Farmer’s Income” indicates that more than one-fifth of rural households with self-employment in agriculture have an income less than the poverty line.
- A 2018 study by the National Bank for Agriculture and Rural Development showed that 52.5% of all agricultural households were indebted with an average debt of $1,470.
3) Between 1995 and 2006, 166,304 farmers committed suicide in India at the rate of 16,000 per year.
So, there can be no argument that the agricultural sector badly needs reform. Accordingly, the Narendra Modi government passed the following three bills—the Farmers (Empowerment & Protection) Agreement of Price Assurance and Farm Services Bill, the Essential Commodities Act (Amendment) Bill and the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill to address at least some of the ills plaguing the industry. The main aim of these bills was to allow greater market play in order to attract private investment and technology to better the infrastructure (storage facilities), increase productivity and improve farm incomes. Agriculture experts have lauded these proposed changes.
Ashok Gulati, the Infosys chair professor for agriculture at ICRIER, writing in the Indian Express (Offloading excess food grain stocks through open market operations will generate much-needed resources for govt. 22 June 2020) elaborates on the utility of each of these bills. He calls the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill a “game changer” that would create “multiple channels for farmers to sell their produce outside the APMC mandi system and also helps towards an unfettered all India market for agri-produce”.
With regard to the Farmers (Empowerment & Protection) Agreement of Price Assurance and Farm Services Bill, which encourages contract farming Ashok Gulati surmises that contract farming would lead to sowing decisions becoming “more aligned to the likely demand and supply situation” instead of the current scenario in which “sowing decisions are more influenced by last year’s price” and “often leads to the problem of boom and bust”.
According to Gulati, the Essential Commodities Act “can come handy to instill confidence in the private sector for building large scale storage” to accommodate the “mountains of grain” that the Food Corporation of India (FCI) has accumulated.
He explains: “As on June 1, FCI had unprecedented grain stocks of 97 million metric tonnes (mmt) in the Central Pool…against a buffer stock norm of 41.12 mmt that are required for the Public Distribution system (PDS), and some strategic reserves. So, compared to this norm, on July 1, FCI will have ‘excess stocks’ of at least 50 mmt…, the value of this ‘excessive stock’, beyond the buffer norm, is Rs 1,50,000 crore. This is unproductive capital locked-up in the Central pool of FCI. Unlock this by liquidating ‘excess stocks’ through open market operations as much as can be done by inviting the private sector in a big way to hold these stocks, at whatever reasonable market price it can get. It will not recover its full economic cost, as they are much higher than the prevailing market prices, but by not liquidating it, FCI will keep incurring unnecessary interest costs of about Rs 8,000-10,000 crore per annum. This is simply dumb food policy.”
Farmers have been sceptical of these new farm laws. Their greatest fear is that safety nets like the current mandi system or APMC (Agricultural Produce Market Committee) and the MSP (Minimum Support Price) would collapse, leaving them at the mercy of big corporation despite the government’s assurance to the contrary.
The government may have erred in the first place by not taking the farmers into confidence before formulating the legislation. However, they have more than made up for the earlier lapse by the current comprehensive offer designed to address most of the concerns voiced by the farmers. Included in this new draft is a written assurance on the MSP, parity between APMC markets and private markets through similar cess, registration of private traders, dispute resolution via civil courts, continuation of electricity subsidies and others.
Continued protest after the government’s latest offer is not needed. The farmers would be well advised to accept the government offer in the larger interest of farmers and the country. Stubborn intransigence and vows to continue the protest complete with a threat to block all highways into New Delhi would mean that the ringleaders are more interested in humbling the government and grandstanding than seeking a genuine solution to their woes.
The farm laws are not perfect or 100% fool-proof. However, with added amendments, the laws have the potential to provide a much-needed framework of change for the agricultural sector, while simultaneously protecting the farmers’ interest. Cooler heads must prevail.