A simple solution in the instant case would be for the FCI to continue as before in respect of everything except the procurement of paddy in Punjab
There have been 10 rounds of fruitless talks between the Modi government and the farmers’ unions so far and the government now seems to have decided that there is no point in talking to them anymore. No date has been fixed for the next round of talks.
The unions are protesting against farm reform and are intent on the immediate political gain of embarrassing the government even if the medium term economic gain to farmers is jeopardised.
The government, meanwhile, is intent on cutting its expenditure because revenue has been hit hard and will be short by almost 25 per cent. Farm subsidies are a major component of this expenditure.
An immovable object has thus met an irresistible force. Or so it appears.
In the end, neither side will have gained anything and lost much. On its part, the government stands hugely discomfited despite the fact that it is in the right. For the unions who are crowing now, it will be a pyrrhic victory.
Many explanations from the political to the economic to the sociological are being put forth for this mess. As is always the case in human affairs, each explanation is true.
But also, as usual, the fallacy of composition is intruding. This fallacy says what is true of the parts is not true of the whole. Or, if you add up all the parts you will not arrive at a composite truth. Something will be always be there to show that you are wrong.
There is a reason for this and it is a very recent one, namely, the 20th century political search for unique, or what economists call corner solutions. It is very appealing to a certain type of political inclination.
This inclination gets accentuated when a political party is dominated by such persons. They look for economic solutions without examining the political complexities and political solutions without examining the other complexities.
In themselves, both, the political and the economic solutions may be spot on. But together they run into the fallacy of composition. Bad consequences follow.
Corner solution problem
But this corner solution panacea wasn’t always there. It began with Marx’s 19th century analysis of economic, and therefore social, dynamics. In the 20th century it was co-opted into other other traditions of social analysis.
If Marx had said all private ownership was bad, this tradition stated the opposite, namely, that all public ownership was bad. Over the decades it got crystallised into a state vs market kind of approach to everything.
In India, bank nationalisation and MNREGA have been perfect examples of the dominant state. But at the same time the state withdrew from many other things.
The Modi government has been caught in this bipolarity and is totally confused as a result.
While political needs require it to be statist, economic needs require it to favour the markets.
Caught outside the crease
As a result what we have seen since 2014 is both economic and political embarrassment. Whether it was land acquisition or labour law or now farm law, the Modi government has stepped out of the crease only to be stumped.
As any batsman who has been stumped will tell you it is always the fault of the pitch. His misjudgement over shot selection is never a factor. The intention may be right, but if the execution is poor, it’s curtains.
That said there is always a simple solution which is almost never considered. In the instant case this is for the FCI to continue as before in respect of everything except the procurement of paddy in Punjab.
A gradual reduction in that will take care of 70 percent of the problem.
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