Setback for reforms

India needs feasible ways to increase farm incomes

The all-round relief that farm groups have ended their protests against the three agricultural laws must be tempered by a sober reckoning of the implications of this 15-month face-off for Indian agriculture and the democratic process in the country. The farmers have earned kudos for the tenacity with which they braved Covid-19, fatalities, the cold, the heat, and the government machinery. The fact that the government agreed to their demands must be considered their victory. The protests have also offered the government a salutary lesson in the limits of parliamentary majority. Had the government engaged sufficiently with farm organisations and the states, India could well have avoided the negative attention of the international media. Controversies like the arrest of a young activist, a spat with a teenage environmentalist, conspiracy theories about farmers’ Khalistani links, and the reprehensible attack by protestors on the Red Fort did not help.

The controversy also marked yet another instance of the Supreme Court encroaching upon the executive space by setting up a committee to assess the laws. This is a route the government could easily have considered through Parliament, a process that may have excluded the continuous elements of the law related to corporate involvement and the limited right of appeal, which detracted from the overall beneficial nature of these laws. By repealing the laws, the government has missed a big opportunity to introduce meaningful reform in Indian agriculture, a sector suffering declining productivity and falling incomes, but paradoxically supporting more than 40 per cent of the workforce. The mainly north Indian farmers who gathered in the National Capital Region cannot be considered fully representative of India’s farming community. They have been the principal beneficiaries of the Green Revolution policies, which offered free or heavily subsidised inputs and an assured market and price for their products via licensed middlemen or artiyaas, who became powerful players in the mandi system.
 

But these benefits have accrued to those who grow wheat, rice, and sugar in limited regions and have created the collateral damage of degrading soil quality and a falling water table. For the majority of the farmers growing other crops and dependent on the monopolistic licensed marketing system, it has been a case of diminishing returns. The data released this year by the statistics office points to a slowdown in farm income growth between FY13 and FY19 with the all-India average earning per household ranging from Rs 8,000 to Rs 10,000. Price support schemes have proved of limited value and have imposed heavy burdens on government finances. Several states have recognised that farmers urgently need marketing freedom to obtain better prices for their products and amended their marketing laws; the Central laws would have enabled this process on an all-India scale. 

Such reforms, however, will now have to wait. The government has also agreed to form a committee to ensure that farmers benefit from the minimum support price (MSP) across the country. Any legal guarantee for MSP —as is being demanded by farmers — will not be feasible because of a variety of reasons, including fiscal constraints. It remains to be seen how this issue is addressed. The government would be well advised to engage with farmers from across the country to find feasible ways to increase farm incomes. After the reversal of the farm laws, increasing the ambit of MSP could permanently damage the prospects of reform in the agriculture sector and must be avoided.