The government has passed the three historic farm bills with an intention of giving farmers their long-pending due. It is meant to change the narrative from sahukar ke changul mein ek garib kissan tha to ab kissan khushhal hoga. In the prevailing Covid-19 scenario, this narrative might take some time to change.
In order to ensure the success of the game-changing bills, the government will have to become the fulcrum between the farmers and the private players. There has been enough political debate on the intention of bringing about The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, and The Essential Commodities (Amendment Bill).
Prime Minister Narendra Modi has himself several times clarified that the bills are well meaning and intended to bring about positive changes in the life of a farmer. He has also assured that MSP would remain and so would mandis (markets). He has slammed the opposition parties saying that they are shooting from the shoulders of farmers and trying to misguide them regarding the intention of bringing about the bills.
However, various political parties have questioned the intention of the government behind these bills, which, they allege, will be favoring the corporates rather than the farmers. Congress, BJD, TMC, AAP and even an NDA constituent SAD have been critical of the government for making this move. The SAD’s senior leader Harsimrat Kaur Badal resigned after her party decided to take a tough stand against the bills.
Nobody can, however, deny a long-felt need for reforms aimed at improving the condition of Indian farmers. Previous governments have set up committees such as the Shanta Kumar Commission and the Swaminathan Commission as a need was felt to improve the condition of Indian farmers and means of their livelihood. The idea behind the government bills is to open up the farm markets in the hope that the move would make the system more efficient and allow for better price realisation, especially the farmers. The central concern is to make farming a more remunerative enterprise. But there have been widespread protests against the bills — particularly in Haryana and Punjab.
Experts with leftist leanings have been critical of the government for not fulfilling the assurances it made after it came into power. They say when the government came into power in 2014 it had assured that it would implement recommendations of the Swaminathan Commission in twelve months.
In 2015, the government had said it cannot implement its recommendations as they are not feasible because it would lead to distortion of market prices. In 2016, the government said it was irrelevant to implement the recommendations and in 2017 the government said the Madhya Pradesh model was better than the recommendations of the commission. They have also stated that in Bihar the mandi system has been done away with, but the system has not really helped farmers much. Even contract farming has been tried in several places but it has not shown great results. With the changes in Essential Commodities Act, the government’s intervention in prices of potatoes and onion would also stop. However, if one were to take a balanced approach one would realise that the government has dared to come up with its landmark bills, being fully aware that the move would invite a strong criticism. These bills are in sync with the Modi government’s trademark style of taking bold decisions to bring about the transformation.
Interestingly, even during Covid agriculture has been one sector which has done exceptionally well. There has been bumper production, which shows that agriculture is one of the most promising sectors which can deliver even during most testing times. Government felt there is a need to connect farmers to private players for a win-win situation but by giving them a level playing field.
The intention is good. But it takes time and a lot of effort for every good thing to fructify. While the government has taken the bold move, farmers are not sure whether it will play out in their favour. One of the reasons being that the farmers who, for decades, have relied on the government for support suddenly find themselves left to their own destiny. The fears of farmers are not unfounded as steps like contract farming and doing away with mandis have been tried at places.
The main sticking point being the uncertainty over continuity of mandis and assurance of MSP. There have been several assurances at the highest level in the government that MSP would remain and farmers need not worry. But there is a growing sense of insecurity among farmers due to absence of any written assurance of MSP in the new legislation. They are apprehensive that exposure to the corporates and private players would lead to their exploitation.
Basically, this sense is created due largely to political opposition and vested interests of some politicians. But it is true that farmers have a feeling that they have been made to take a plunge in the water to swim on their own even when some of them are not capable. This is not to say that they are averse to changes as there are examples of how well they worked closely with food supply aggregators and ensured their crops were sold and reached the end user.
It’s just that under the new regime there is a fear that the mandis would be bypassed and prices would be decided by private players and corporates. And that there is a danger that cartels would come into existence and they would dictate the prices to the farmers. Also, there is no certainty about the necessity of a contract between the farmers and corporates. There is no set format or preconditions laid down for such contracts. In the absence of any guidelines, the possibility of innocent farmers being exposed to exploitation cannot be ruled out.
The government has come up with a mechanism for redressal for farmer’s issues in case of dispute with corporates or private players. The farmers could approach their local area sub divisional magistrate with their issues and he or she would form a committee which would have equal representation from the both sides. In case their issues are not addressed, they could also approach the district magistrate or appeal to the higher authorities.
While the government has worked out a mechanism for grievance redressal it should also think on the lines of providing farmers pre contract or pre agreement legal counselling. This would eradicate communication gap, if at all any, and lack of understanding on the part of both the parties.
In due course of time, the bills would lead to business between the farmers and the corporates. While this happens, various state governments could also think about encouraging corporates and private players for setting up manufacturing units near the place where agricultural produce is grown. For example, setting up potato chips factories in areas where potatoes are grown, mango products in areas where mangoes are grown and so on so forth. This would require state governments to come up with irresistible offers to corporates. However, if such a mechanism is worked out it could also generate employment in the manufacturing industry as well.
India’s arable area as a percentage of national landmarks is among the highest in the world at about 43 per cent. However, the problem is with the agricultural output, which is among the lowest in the world in comparison to the potential resources the country has. Since India’s Independence, very little capital investment has gone into this sector on an institutional level. It is expected that the new legislations would change the scenario and would lead to more investment in the sector.
The agricultural GDP share in countries like Netherlands, France, Ukraine and Australia is between 18 and 19 per cent. In India, contribution of agriculture to the GVA has decreased from 15 per cent in 2015-16 to 14.4 per cent in 2018-19. GDP from agriculture in India averaged Rs 4231.13 billion from 2011 until 2020, reaching an all-time high of Rs 6098.83 billion in the fourth quarter of 2019 and a record low of Rs 2690.74 billion in the third quarter of 2011.
GDP from agriculture in India decreased to Rs 5306.26 billion in the first quarter of 2020 from Rs 6098.83 billion in the fourth quarter of 2019. It is estimated that India’s agriculture sector accounts only for around 14 per cent of the country’s economy but for 42 per cent of total employment.
What India needs today is agricultural industrialisation. Covid-19 has shown how a majority of Indian population depends on rural India for sustenance. Due to reverse migration, the work force has reached back to rural areas. The work force migrated to cities as agricultural income could not sustain them. In the present scenario there is an opportunity to work on a new strategy and gainfully employ displaced people in the agriculture and food processing sector. The farm bills could be a force multiplier in this direction if implemented in a proper manner. Unfortunately, the agricultural footprint in India has been largely political. Indian farmers are always projected as poor as against a prosperous community in foreign countries. The Indian political system has seen farmers as vote-banks with emphasis on subsidies.
There is a need to understand that agriculture is not only sustainable machinery, it may be a very profitable business venture if done through proper investment, knowledge and facilities.
There is a need to link agriculture with latest technological development, skilling of farmers with scientific method, improving micro financing and cooperative structure with an aim and scale of industry. There is also a need for improving processing, supply chains and export facilities.
Prime Minister Modi has taken some very positive initiatives in this direction, especially the focus on soil testing and creating a conducive environment for food processing to take off in a big way. Now the government has taken a bold decision by bringing about the three farm bills aimed at improving the condition of farmers. The bills have to be implemented in a manner which wins the trust of Indian farmers and, at the same time, it gives a level playing field to corporates, who would invest and create more employment opportunities.