‘From much-needed reform’ to ‘bitter pill administered too fast’ to ‘recipe for disaster meant for a corporate takeover of India’s agriculture’ to downright ‘fascist,’ the arguments for and against India’s new farm laws span the breadth of opinion.
Hundreds of thousands of Indian farmers have been on the protest path for 19 days as of Monday, December 14, over the three new laws enacted by the Narendra Modi government.
The farmers have virtually laid siege on Delhi and police in the national capital have barricaded them off at the city’s borders.
The farmers have a single-point agenda — repeal of the three laws: the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act 2000 (FPTC Act), Farmers’ Empowerment and Protection Agreement on Price Assurance and Farm Services Act 2000 (PAFS), and The Essential Commodities (Amendment) Act, 2020.
The government says the new laws are much-needed and overdue reform measures that will benefit farmers and free them from the clutches of “middlemen”, but the farmers are not buying — they say the laws destroy the government safety net for food produce and will place them at the mercy of big corporations.
“There is no mention of a minimum support price in the laws, giving farmers at least 50 percent above their cost of production, as recommended by the Swaminathan Committee Report,” Justice Markandey Jatju, retired Indian Supreme Court judge and a columnist for this publication, told indica News.
He said that while ostensibly giving farmers freedom to sell their produce wherever they wanted, the laws “are really a surreptitious device for handing over the agricultural sector of the Indian economy to the corporates, and the farmers’ organizations were not consulted before the bills were enacted.”
He said the Indian government needed to set up a farmers’ commission comprising representatives of farmer organizations, the government, and some agricultural experts.
The commission, he said, “should hold several meetings to consider all aspects of the farmers’ problems, and then after wide discussions, the consensus which emerges may be enforced by suitable legislation.”
Farmers constitute 60 to 65 percent of India’s population of 1.35-1.4 billion people, i.e. about 750 million.
“This is a huge entity, and if united, constitutes an irresistible and indomitable force, like a typhoon or tidal wave,” said Katju, adding that the ongoing protest “seems unstoppable.”
In Silicon Valley, views are more mixed over the new laws.
“Indian farm sector desperately needs reforms and this is a great policy move,” veteran Valley venture capitalist Kanwal Rekhi told indica News.
“But it should have been phased in over a couple of years. Modi’s penchant for sudden moves makes it harder for market adjustments,” Rekhi added.
“In any case, it is good that it is corporate friendly. Indian corporate sector needs to engage in the farm sector to improve its efficiency and productivity.”
He added: “In any case, the Hindutva baggage carried by the BJP government makes it harder for them to build consensus around good economic moves.”
Anjini Kochar, a 3ie senior research fellow who has served as director of the India Program at the Stanford Center on Global Poverty and Development, pointed to the minimum support price (MSP), just as the farmers have.
“As I understand it, the main concern of the farmers is over minimum support prices. This is a huge safety net for farmers, as it provides them insurance against any drop in prices by putting a floor on them,” Kochar told indica News.
She said that given the recent uncertainty in the economic environment, this is likely to have become an even bigger concern.
A common market should increase prices and help growth but the concern is more about the variability in prices and farmers’ exposure to risk, she said.
“While in principle insurance is available to all farmers, I understand that the system does not work well — most farmers report significant delays in getting insurance, though I am not sure what the position is in Haryana and Punjab. This is the reason why farmers are upset,” Kochar said,
“The problem is that with MSP, there are no delays in implementation, so it was a very reliable way to reduce risk to farmers and the alternative ways don’t work nearly as effectively.”
According to the Indian ministry of agriculture’s press note, India has become surplus in most farm commodities but farmers have been unable to get better prices due to lack of investment in cold storage, warehouses, processing, and export as the “entrepreneurial spirit gets dampened due to Essential Commodities Act.”
Farmers and critics of the laws say the diluting the Act paves the way for big business houses to hoard essential commodities, regulate their price and take away farmers’ bargaining powers.
Farmers suffer huge losses when there are bumper harvests, especially of perishable commodities.
The amended Essential Commodities Act will help drive up investment in cold storages and modernization of food supply chain, the government says, and that it will create a competitive market environment and also prevent wastage of agri-produce that happens due to lack of storage facilities.
The new laws, according to the government, will attract foreign investment in India’s agriculture sector.
“What Modi is trying to do is not going to work to attract foreign investment, Dr KRS Murthy, investor and founding member of the IEEE Nanotechnology Council, told indica News.
“First because in USA the farmers are few (not many compared to India) and each of them manages thousands of acres using foreign automated equipment starting from tilling the land to seeding to taking care of watering to harvest and then transport. Everything is done by one single family managing very large farm and tractor and automation-based. In India most farmers have 1 to 5 acres of land.”
“So, this is a systemic issue, not a political issue,” he said.
“A lot of people do not understand — corporates would use automation; like in China they have created robots and Chinese workers have been replaced by machines. The same could happen in India. Farm labor could be replaced by machines,” he said.
“The politician don’t understand and don’t care, nor are corporates interested in farmers; they are in interested making money. These laws will benefit the banking system and corporates and farmers will borrow to meet the competition,” he said.
Venktesh Shukla, venture capitalist and former TiE Silicon Valley president and TiE global president, had a markedly different view.
“Every time a major reform takes place in India, the beneficiaries of the status quo are upset and if they happened to be organized, they create roadblocks,” Shukla told indica News.
“Like it happened with the 1991 reforms [when India opened up its economy] when the Bombay Club group of industrialists painted the doomsday scenario that recolonization of India by the foreign hand was inevitable. They were, as the expression goes, fat dumb and happy, and worried that the protection from the competition companies they had is going to disappear and they will have to compete on price and quality.
“Of course, as we know, that reform transformed India’s economy and made it into the major power that India has become,” Shukla said.
“This reform is no different,” he added.
He said that the current agricultural regime has led to massive problems.
“The farmers in Punjab and Haryana have started growing rice as their second major crop because they benefit from MSP. It leads to a surplus of grains in government warehouses that rot over time. The water table is depleted, more and more harmful chemical fertilizer and pesticide is used which poisons the soil and the underground water. Production of other grains, pulses, and vegetables has suffered due to lopsided incentives. The country does not need more wheat and rice, why should it incentivize the farmers in Punjab to grow more of it?”
“In the rest of the country, the farmers do not benefit from MSP in a significant way. Freeing them from the clutches of local mandis will do a world of good to them as the farmers will be free to sell to anyone or not to sell to anyone and put it in cold storage if it gives better return,” he said.
“Competition among buyers will lead to better outcomes for farmers. Since the rest of the country does not benefit from MSP, the angst among farmers in the rest of the country is not visible.”
Asked if farmers shouldn’t fear corporate monopoly, Shukla said: “A free market is not a monopoly market except by the choice of the customer.”
Others say MSP is what has led to the comparative prosperity of Punjab’s farmers as opposed to their counterparts in, say, Maharashtra. The farmer suicide problem is most acute in Maharashtra’s cotton belt, where there is no MSP safety net.
Yet others have pointed to dangerous provisions in the new laws, restricting citizen’s from approaching the judiciary against the government.
These provisions, they argue, make the new laws dangerous not just for India’s farmers but for a citizen’s rights.
Veteran Indian journalist and agriculture expert P Sainath, in an article in The Wire, wrote that the new laws “are surely among the most sweeping exclusions of a citizen’s right to legal recourse in any law outside of the Emergency of 1975-77 (when we simply suspended all fundamental rights).”
He added: “Every Indian is affected. Translated into English, the legal lingo of these laws also convert the (low-level) executive into a judiciary. Into, in fact, judge, jury and executioner. It also magnifies the already most unjust imbalance of power between farmers and the giant corporations they will be dealing with.”