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Some farmer groups have extended support to the farm Bills, even as farmers opposing them have stepped up their agitation. It is important to make it clear that the stakeholders in the ongoing tussle are not just farmers. Other groups, particularly the poor, have a stake in farm policies.
Indian farm produce is priced above what the export market can absorb, thanks to farm policies that have outlived their original purpose and failed to adapt. India’s grain stocks are far in excess of what is needed to ensure food security. This is because of open-ended procurement at the minimum support price (MSP) that does not take into account globally comparable efficiency, reflected in traded prices. The cost of such procurement is an inflated subsidy bill, on power, irrigation and fertiliser, as well as on high-cost procurement, which includes devolutions to the states from where procurement is carried out, in the shape of taxes on the procured grain levied by the regulated market (mandi) or, indirectly, the state government. This is unfair, both to the poor, who see the state’s resources, on which they should ideally have first claim, being diverted to well-off farmers, and to other states, from where no procurement takes place. Further, MSP and open-ended procurement prevent intelligent, market-oriented diversification of crops. India, in consequence, is perennially short of lentils and oilseeds, keeps importing them, and allows grain to rot in government godowns.
It would make sense for the government to offer, and the farmers to demand, viable options for moving out of grain into the crops that the country needs. Continuing with the status quo is to coddle farmers of a few crops in a few states at the expense of the many. That is bad politics.
This piece appeared as an editorial opinion in the print edition of The Economic Times.