Repealing of Farm laws- An analysis

Gunnar Myrdal, in his three volume magnum opus, ‘Asian Drama’ for which he received Nobel Prize, said that the war on economic development in India, will either be lost, or won in the battle field of agriculture. Despite such a transformative remark, Indian agriculture, is languishing and has been in an ailing position for more than seven decades. After four decades of Gunnar Myrdal’s prophetic statement, farm mechanization is halfway through, land development has become lopsided, non-uniform distribution of irrigation facilities throughout the country, availability of quality seeds remains a chimera and organized farming and agricultural diversification is still happening in a haphazard trajectory and production and productivity has been dwindling down and farmers’ suicide is still not abating and rural distress is threatening all our developmental goals.

The country today, no doubt, has achieved self-sufficiency in agriculture. In last 7 years the agricultural growth has remained at 3.5% without any incremental growth. The contribution to exports in agriculture has remained stagnant for many years. Despite the assurance provided by the previous Governments, little seems to have been achieved in agricultural growth. Realizing this, the Modi Government wanted to bring sweeping reforms to modernize our agriculture, by passing three farm laws. Our Prime Minister has hailed this moment as the “watershed moment” in Indian agriculture.

The three farm laws in a nutshell lays down the emphasis on expansion of scope of trade areas for farm produce, online trading of farm produce, ensuring farmers’ protection by providing a legal framework, mechanism for dispute resolution and amendment of the scope of Essential Commodities Act, with inclusion and exclusion of select items. The states of Chhattisgarh, Rajasthan, and Punjab have sharply reacted against the passing of the act by passing counter legislation. Shetkari Sangathan of Maharashtra has welcomed the law while Bharatiya Kisan Union under the leadership of Rajesh Tikait has treated the laws as draconian. Economist Kaushik Basu treated the farm laws as a “flawed” concept.

Noted Agriculture economist, Ashok Gulati and former IMF chief economic adviser Gita Gopinath treated it as real reforms, which has the potential to augment farmers’ income. This will increase competitiveness of Indian agriculture and will bring better opportunities for national and international trade. But the opposition has criticized it stating that it is simply a corporatization of Indian agriculture where the gullible farmer is sacrificed on the altar of corporate interest. What ensued was protracted stir and at this moment, the Supreme court of India intervened by staying the three farm laws and constituting a panel to look into the grievances of the farmers.

The government is providing support in the form of fertilizer subsidy, interest intervention of 3 percent and financial help under PM KISAN scheme, and support under MSP. We are bound by the WTO’s Agreement on Agriculture. But developed countries such as the US are complaining that trade distorting subsidies are being provided to Indian farmers which is discriminatory.

So, Indian parliament passed the needed 3 farm laws to augment farm income with an ultimate aim to minimize rural distress, bring in reforms in Agriculture. The logic was based on the pillars of private investment in agriculture, logistics, input and output augmentation, commercialization of agriculture and the possibility of heralding an era of e-commerce in agriculture.

However, post enactment of three farm bills there was wide spread protest across India and more seriously in the state of Punjab and western UP that choked Delhi, with thousands of farmers protesting for the repealing of the supposed exploitative, corporate friendly farm laws. Various political parties saw it as an opportunity to target the NDA government. Even Shiromani Akali Dal a long time partner of BJP, withdrew its Minister at Centre as they firmly opposed the farm laws. The protesters even wanted to include 23 farm commodities under MSP and to legalize the same. But the farmers felt that there was a possibility that the scheme of MSP will be withdrawn. This led to an intense battle, high drama and some anxious moments.

The Prime Minister of India on the occasion of celebration of Guru Purab, the birth anniversary of Guru Nanak, declared to the nation that despite their relentless efforts they could not make the farmers understand the benefits of farm laws and apologized before the people of India. It is said, ‘Vox Populi is Vox God’, that is voice of people is voice of god. So, the Government conceded to the demands of farmers and promised to repeal the 3 farm laws in the upcoming winter session of the Parliament. Many questions arose in the minds of people as under.

Was PM under pressure? Will he win the trust of the farmers if he repeals the farm laws? Will it make other regional parties of protesting states more amenable to BJP and open the roads for further intensification of BJP Campaign to retain power in Punjab as well as UP who are going for elections shortly? Politically, it may be correct to do this as it will tilt the balance in favor of BJP but some of the opposition parties feel that it is a total surrender.

The latest development is that the farmers are not stopping their agitation and are bent upon the idea of repealing of the farm act. They have reiterated their demand for inclusion of 23 agricultural commodities under MSP and to legalize the scheme of MSP. But as per Anil Ghanwat, an agricultural leader as well as the member of the farm law committee, which was set up by The Supreme court of India, stated that if government accepts the demand of legal protection of 23 food grains under MSP, India will go on the road to bankruptcy. It seems, the demand of the farmers are becoming irrational as India currently holds a stock holding capacity of 40 million tonnes and cannot manage produce of 110 million tonnes of produce.

It appears that augmentation of farmers’ income may be elusive, unless the Government and the Supreme Court of India take bold decisions to protect the interest of India.

By Suresh Chandra Sarangi

The writer is a former General
Manager of Bank of India

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