In 1991, India liberalised its economy. The hitherto applicable license quota permit raj was done away with. Private investments were now given impetus. Trade barriers were rolled back. Foreign capital was welcomed. Efforts were made to shift from import substitution to become part of global supply chains. The results were impressive. India witnessed a steady growth rate of above 7% for close to three decades. The size of the pie (the GDP) increased considerably. According to UNDP India moved out 273 million people out of poverty in the period 2005-2015.
However, there is a dark side to the story too. The neo-liberal reforms of 1991 resulted in only a small number of winners and a large swathe of losers. Consider this, according to Oxfam, top 10% of richest Indians hold more than 77% of India’s national wealth, while the bottom 50% of Indians hold a mere 2.8% of the same. Certainly, the pie has not been distributed equitably.
One conspicuous absence from the reforms of 1991, was India’s largest private sector- the agriculture. Agriculture in India employs more than 50% of the Indian workforce and contributes a mere 17% to the national Gross Value added. The poor performance is due to stagnated technology, dwindling land-holdings, lack of entrepreneurship opportunities, market restrictions, lack of forward linkages, usury and lack of formal credit and insurance and a large proportion of disguised unemployment (greater number of employees than the optimum number required).
The farmer of India has immensely contributed to the growth and development of the nation. From India’s reliance on the USA’s PL-480 for food security to self-sufficiency in food production, India has come a long way. But, not the farmer of India. According to an NSSO report, the average farm household income in India is a mere Rs. 77000/- per annum. Further, more than 86% of farmers in India hold less than 2 hectares of land with average land holding only 1.08 hectares. India is effectively a rich granary with a million poor farmers.
Government over the years have constituted a number of expert committees and commissions to look into the sad state of affairs of the Indian farmer. In 2005 the then Agriculture minister of India Sharad Pawar talked about liberalising the farm sector and abolishing the APMC framework. In 2011 the Planning commission recommended liberalisation of agriculture sector with suitable amendments in APMC act. Most recently a high-power committee of the NITI Aayog, which included Chief Ministers Amarinder Singh, (then CM) Kamal Nath, Naveen Patnaik, Manohar Lal Khattar and Yogi Adityanath, emphasised the need to accelerate the food processing sector, draw more investment in agriculture and stressed upon amendment in the APMC and Essential Commodities Act.
It is in this light the three farm bills - the essential commodities (amendment), the farmer produce trade and commerce (promotion and facilitation) and the farmer (empowerment and protection) agreement of price assurance and farm services were passed by the parliament.
The government has acted in good faith acting on the recommendations of reports which signify bipartisan support. But not everyone is happy. There is vociferous anger on the streets and demands are abound to roll back these acts.
The reasons for such disdain are wide and many. The country is still recovering from the disruptions caused by GST implementation and demonetisation, as such another major disruption in the farm sector doesn’t send encouraging signs amongst the farmers. Then there is a palpable lack of communication of the government with the farmer. The government has not been able to reach out to the farmer explaining its intentions. Also, there is an air of arrogance, as the government could have easily pacified the farmers if it had opened negotiations in the initial phase of protests when they were sporadic and localised. The government steamrolling the bills in the parliament without due scrutiny and deliberations has also irked many.
The most significant and prominent reason for the farm protests is the lack of belief in the neoliberal growth model. As seen already, the pie never gets shared equally. It is an inequitable and unsustainable model. The farmers fear becoming workers on their own farmland to the mighty corporate with deep pockets who can influence both bureaucracy and judiciary to further its interests, leaving the farmer hapless. The fears get further strengthened when there is a cacophony augmenting this view and a past record vindicating the same.
Another peculiar feature of the protests is its localisation to Punjab and Haryana. Well, there is a good reason for that. The government for its food distribution through PDS procures a major share of cereals from these two states along with Madhya Pradesh. The procurement takes place on the government-mandated Minimum Support Price. It’s a price assurance where the minimum price is guaranteed. As an analogy, it’s like a government job for the farmers where their remuneration is more or less fixed divorced from the vagaries of the market. If such a privilege is to be taken away, who wouldn’t protest? Though it’s not a privilege per se, as these were the states who actually heralded the green revolution and brought food sufficiency in India. More than a privilege it’s a deserving reward.
The government announces MSP on 23 crops, at 1.5 times the cost of inputs and family labour incurred by the farmer. However, the procurement doesn’t take place on all 23 crops. Only 6% of farmers are covered under MSP procurement, and 86% of them belong to Punjab and Haryana.
For the farmer of the two states, it’s a boon. But for the state, the results present a mixed picture. While there is a booming economy, a definite culture of affluence due to farm prosperity but there is a lack of diversification, lack of high income generating economic evolution, the states still remain predominantly agricultural. More stark is ecological degradation. Repeated cycles of paddy and wheat production have rendered the land infertile, to overcome which there is a burgeoning usage of pesticides, fertilisers and other chemicals. The subsidies on fuel and electricity and dependence on irrigation have exerted undue pressure on the water table in Punjab and Haryana. 109/139 administrative blocks in Punjab are over-exploited in terms of groundwater. It has been reported that Punjab may run out of groundwater by 2039. The states need urgent crop diversification.
It’s also an irony that today the government seems to be reformist while the beneficiaries seem status-quoits. It’s actually a tragedy in India that all reforms are imposed in a top-down manner. But, taking into confidence all the stakeholders not only increases legitimacy but also acceptance. Engaging with the opposition can be a step in this direction, though the opposition in India opposes everything just for the sake of it.
The obstinacy of the government stems from the fact that such a rollback may set a bad precedent. It can intensify the calls to roll back the CAA or even the abrogation of article 370. It can hurt its reformist agenda to the core. It is perhaps the reason both sides are relentless and digging in for a long face-off. The BJP already doesn’t have much to lose in Punjab, the only plausible loss can be the Dushyant Chautala factor in Haryana.
A way out for the government is to empower the states to decide on the merits of the three bills. It will not only save its face but also ally the fears of protesting farmers. The government on its part should implement the bills in the BJP ruled states, and set out an example of prosperity. Nothing less than tangible progress on the ground can pacify the farmers who are better-off without such reforms.
For actions speak louder than words.
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