There is little doubt that the three Farm Laws have created unease if not unrest across the country. In some parts of India, the agrarian crisis has combined with the fear of these laws to create a perfect storm. The propaganda that non-participation in protest is equal to support for the laws, that the protests are by those who are anti-national or that only rich farmers are protesting would be erroneous at its worst or at least ignorant of history. The government has too often made the mistake that it will not budge since it wrongly believes that a climb-down is a political defeat.
Such an attitude does not bode well for the long-term health of agriculture. The discontent needs to be seen in the context of rising cost of cultivation, recent moves to dismantle subsidies and the sharp increase in taxes on diesel prices which are pinching all categories of farmers – small and marginal, medium and rich. Widespread discontent is also fuelled by the impression that the Central government is not keen to find solutions to the long standing problems in agriculture, especially the ever increasing cost of production.
The farmers’ protests and the present stalemate is probably a good time for the Central government to consider at least some important changes to the laws and the problems of agriculture as middle of the road alternatives. A repeal of these badly conceptualised and designed laws is the most preferred option.
Possible changes
The most important change that the government has to undertake is a remedy to its blunder that allows the government to be a judge of its own policies and as the final arbiter of disputes between parties. This attempt to shelve the concept of separation of powers, which is a fundamental aspect of our Constitution, must be withdrawn.
This must be moved to the judiciary with the change that it shall be entrusted to special courts which have to be (a) established, (b) operationalised and, (c) shall discharge cases in a time bound manner. The implementation of the laws shall be linked to these three aspects lest they end up like most laws where these three aspects lag the passage of the laws by the legislature.
The second problem that needs urgent attention is the issue of extreme price volatility, especially at the time of harvest. This age old problem continues to plague agriculture. Increased supply invariably means a collapse in prices and the nature of agricultural holdings means most of the producers have no option but to sell immediately at harvest – even at extremely low prices or simply destroy their crop.
Invariably, the 22 crops with MSP are marginally better off. At the time of its introduction, minimum Support Price (MSP) was expected to offer a floor price – something that happens at times, and often only, when sales are in mandis. There is erosion in the centrality of mandis in many states, except when farmers hope to eke out at least the MSP during times of price collapse.
This has occurred concurrent to the growing clout of intermediaries/traders since they are now an important provider of inputs including capital. Fragmentation of holdings and rise in number of tenant farming has only helped increase influence of intermediaries. Moreover, the practical aspects of implementing MSP are essentially with the states.
A probable solution that the Central government may consider is the need for it to go beyond MSP and instead offer a guaranteed market stabilisation mechanism with clear budgetary allocations where the state governments purchase the crop in case of price fall below the floor price set by the Centre and are reimbursed by the Centre. There is an existing mechanism through the Commission for Agricultural Costs and Prices (CACP) to estimate the costs. An old problem in India is budget allocating monies but departments not spending these allocations resulting in the lapse of funds. To avoid this in the case of agriculture, any market stabilisation budgetary allocation should be made non-lapsable thereby averaging the amount of money that the government may have to spend.
Third, apart from decline in margins for cultivation one of the biggest problems remains the availability of credit from the formal banking sector, which carries the least interest. Despite claims of ever increasing priority sector lending (PSL) targets for agriculture and allied activities, credit disbursal to small and marginal farmers is low. In 2019, an RBI Internal Working Group agreed that Kisan Credit Card (KCC) penetration was only 10.5 per cent of the total agricultural households. Hence, expanding this is the need of the hour and will go a long way to help the smaller cultivators.
(S Ananth is an independent researcher Based in Andhra Pradesh. Views expressed are personal)
Disclaimer: The views expressed above are the author’s own. They do not necessarily reflect the views of DH.