Govt must keep pushing farm reforms
The surprise withdrawal of three farm laws can increase uncertainty and affect the overall reforms process. Prime Minister Narendra Modi in an address to the nation on Friday announced that the three controversial farm laws would be withdrawn in the upcoming session of Parliament. The government had hoped that farmer groups would end their agitation, which started nearly a year ago. But that doesn’t seem to be happening. Agitating farmer groups, among other things, are now demanding a firm guarantee on minimum support price (MSP) and the withdrawal of the Electricity Amendment Bill. Although the government has categorically conveyed that public procurement would continue, farmer groups are pressing for a legal guarantee. Since this will simply not be feasible for the government, middle ground needs to be found.
There is no dispute that farmers need to be fairly compensated for their produce. But any form of guaranteed price is not the way forward for a variety of reasons. The benefit of MSP is available to a limited number of farmers in select few states, and the government is not in a position to procure more than what it is already doing. Also, the present cropping pattern in states such as Punjab and Haryana, which a guaranteed MSP will further encourage, is simply not sustainable. The unabated pumping of groundwater supported by subsidised power has led to irreversible damage to the ecology of these states. Besides, the agriculture sector needs to adjust to the evolving market and demand conditions.
The three laws were in the right direction and would have taken the reforms process forward. However, the way in which these laws were passed led to distrust among stakeholders. The farm laws were first introduced as Ordinances in June 2020 and were later passed by Parliament without addressing all the concerns. Since agriculture is a sensitive area and a source of livelihood for a large proportion of the population, the government should have spent more time building a consensus and explaining the intent to the farming community. There was absolutely no need to take the Ordinance route and later rush the Bills through Parliament. A consensus approach would have helped all stakeholders.
Since the government has decided to withdraw the farm laws, it’s worth debating how reforms should proceed in the agriculture sector because the present situation is untenable. The prime minister has announced that a committee with wider representation will work in this area. The best way forward, to be sure, will be to let the state governments take the lead. As a report in this newspaper showed last week, a lot of what the new farm laws intended to promote is already happening in several states. In terms of providing remunerative prices, a combination of interventions needs to be adopted. Continued public sector procurement could be one part of it. The government can also compensate farmers for lower realisation, and it has a scheme for this purpose. Further, the government can encourage cooperatives or farmer producers to participate in the value chain. The government will have to constantly engage with farmers to push reforms and improve productivity in the sector. At a broader policy level, the chain of events in the context of the farm laws has dented India’s policy credibility and should have been avoided.