Duda’s Daily Doodle


The the two Bills on Farm Reforms and the one on the amendment to the Essential Commodities Act that were passed in the Lok Sabha on 16 September are being used as political tools by the opposition. And, even Akali Dal, a partner in the NDA, has taken a stand that they think would help them align with the expectations of their supporters.

Congress had wanted something like this and had put it in their manifesto as well. If it had reservations only about some fine-print contents of the bills, it should have tried to get these resolved and played the supportive role. Doing this would, obviously, not be realpolitik but the Congress should realize that given its limited and diminishing mass appeal and just 51 MPs in the Lok Sabha, it would, probably, be able to reach out to the masses better if it played the dignified supportive role instead of an insignificant confrontationist. The Congress needs to build up a portfolio of good work that they have done – independently or as a supporter – and create their campaign around it. A party not in power, seemingly not generating the momentum to get even close to it, and having left a lot of footprints of misdeeds through its tenure cannot be limiting itself to negative campaigns. Also, criticism of a politician and his party that has converted voters into worshipers does not help – it only makes these worshiper more dedicated and loyal.

Every reform of the NDA is grandiose and the outcome of these is, generally, not what is articulated at the launch ‘ceremonies’ – demonetization and implementation of GST are examples that make people skeptical about the gap between their intention and execution.

These Farm Bills are a great step to ‘unshackle’ farmers and give them access to the market for getting the appropriate price for their produce. No one can deny the reason and the right of the farmers to be a part of the market economy at the national level. However, what needs to be considered is that just as a large section of the Indian industry was not, and is still not, able to withstand the aggression and uncertainties of market forces and keeps seeking protection from the government, it makes enormous sense to have the protection of Minimum Support Price (MSP) as the reference price for procurement outside registered ‘mandis’ under state Agricultural Produce Market Committees (APMCs). The large market players can easily manipulate the gullible farmers with the support of the local level administrators who are capable of and willing to play around with the system to generate benefit for their benefactors.

Under the new law that is being enacted, the marginal and small farmers can aggregate and enter into contract farming agreements with agri-business firms, wholesalers, processors, exporters, large retailers for the sale of future produce at pre-agreed prices. This would transfer the risk from the farmers to the sponsors. Seems like a great initiative but needs to be looked at in the context of ground level realities. The average farm land holding of a household in India is a measly 1.1 hectare. While 86 per cent of the farmers are marginal and small (<2 hectares), they own only about 47 per cent of the crop area. By deduction, 14 per cent of the large farmers own 53 per cent of the crop area. This clearly establishes that a majority of the marginal and small farmers are working on, and dependent upon, very small land holdings and are already on crutches. They would need to be held by both hands to make them walk the market path to prosperity that is being created for them. The equation in the business relationship that is likely to emerge between the ‘sponsors’ and the farmers would – for quite some time – be immensely lopsided and hence might result in exploitation.

Given the established good intention of the party in power, it is inconceivable  that the law makers are trying to deliberately create an environment in which the marginal and small farmers would be subjected to increased exploitation. The opposition is, certainly, being harsh. However, it would not be out of place to assume that considering their intellectual level, their limited exposure and the complacency that they have acquired as a result of perceived invincibility, they are living in la la land and are not able to look at things in a holistic perspective.

The new law, when enacted, is expected to enable farmers to access better technology and get better inputs. Use of technology would, certainly: improve productivity; decrease the use of fertilizers, water and pesticides; generate less stress on the eco-system; create improved working conditions for farm workers; etc but, at the same time could reduce the dependence of family members for managing their very small land-holding farms. This would result in increased migration to urban areas in search of employment and in all likelihood further increase the population of unemployed. With the employment having taken a big hit in the recent past and our generating, despite not wanting it, jobless growth we would have an additional problem to live with and handle. Through the pandemic the economy has taken a huge hit and even after the vaccine hits the market, it would take quite some time to bounce back – the green shoots are very comforting but we still have a long way to go to get back to a stage where we could see a 6-7 per cent year on year growth. How are we going to handle employment through this period is a colossal challenge that needs to be addressed.

The noted agricultural economist, Ashok Gulati, described these Bills as “something like de-licensing of industry in 1991”. The number of stakeholders who were subjected to risks in the de-licensing of industry were minuscule in comparison to agriculture. Every farmers in the country is a risk taking entrepreneur and these people, a majority of whom are poor and uneducated, cannot be subjected to the big sharks that could emerge in the market driven environment in agriculture that we have embarked upon to create. De-licensing industry is not the relevant policy benchmark for agriculture. The risks in agriculture are huge and if these laws are not implemented well to get the desired results, we would be running the risk of getting into a condition of economic and human distress.

The industrial de-licensing was conceptualized under the New Economic Policy that was formulated and implemented in 1991 by Manmohan Singh, the then FM in Narsimha Rao’s cabinet and that was, without doubt, the game changer for the Indian economy. It is expected, if Ashok Gulati’s predictions have to come true, that agricultural reforms would be handled with the same level of visioning, conceptualization, professionalism, engagement with stake-holders, etc. There is, apparently, a huge capability gap between the driver of the NEP of 1991 and that of the driver of the agricultural reforms of today and this concern cannot be ignored.

Passing of laws is not an end in itself. These have to be well thought out, implementable, and should yield the desired results. Good intentions have to be converted to good policies and laws and the institutions responsible for implementation have to be strengthened concurrently. Laws are not meant to generate work for courts but to build an organized and progressive society.

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