Farmers who were agitating in the outskirts of Delhi are rejoicing following the abject surrender by the government which has acceded to all their demands, including amendment to the Electricity Act (which would have paved the way for an end to free power). But the developments are a major setback to the crisis-ridden farm sector and the rejoicing farmers are likely to pay the price in the long term because the repealed laws were favourable to them. In a country where average monthly farm incomes are barely above ₹10,000 , a status quo on policy isn’t good news at all. It means that we persist with shortage-era laws and shackled agri-markets at a time when India has moved from food scarcity to surplus. Allowing private markets beyond the APMC’s jurisdiction, where they cannot levy a fee or demand a licence to trade, would have acted as a boost to Farmer Producers’ Organisations and other aggregators. It is well known that buyers’ cartels are at work in APMCs. The Essential Commodities (Amendment) Act would have removed stockholding limits on farm produce, allowing for better prices to farmers and freeing businesses of the constant fear of the law being invoked. The farm sector needs a solution to poor realisation, low share for the cultivator in the final price and increasing input costs. It requires marketing and storage infrastructure for crop diversification, which the government alone cannot provide. Private players have a role here, and the repealed laws would have encouraged them.
Yet, all isn’t lost. The locus of reforms can shift to the States, which is just as well since agriculture is a State subject. In the case of Punjab, a plan to wean farmers away from water-intensive paddy (about 30 lakh hectares of it) can be put in place. To this end, attractive prices should be offered for growing arhar, chana, oilseeds, cotton and maize. Punjab’s groundwater and soil are in a dire state. Cane cultivation in western UP has had similar effects. A process of hand-holding by the Centre in cooperation with the States is essential for this transition. In order to provide farmers with a fair price, the ‘Bhavantar’ scheme (the farmer is compensated for the difference between the sold price and MSP), can be promoted. Introduced by Madhya Pradesh, it has languished for lack of funds from the Centre. An income transfer rather than procurement scheme may not invite WTO objections.
Finally, the Centre needs to display political sagacity and tact — of the sort that was on display during the consultations on GST — to get the ball rolling again on farm reforms.
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