Emergency situations call for prompt rectification. When we faced the foreign exchange crisis pledging 60 tonnes of gold reserves to foreign banks to raise 600 million dollars, it led to the ‘1991 moment’, the liberalization.
However, when “reforms” pending for years are hurriedly pushed through “executive laws” – the Ordinance – and thereafter in the Parliament via a voice vote, when the nation was facing aggression by China and the citizens were in lockdown due to pandemic, it betrays a strategy of reforms by ‘shock-tactics’, what the economists like Milton Friedman and Naomi Klein advocated. For them, a natural disaster, a pandemic or a war is the most opportune time to shove change and they prescribe speed, surprise, and shock as legitimate tactic to transform economies to ‘money markets’. There is no scope for discussion, debate or consensus; sheer fleetness would carry the day.
Niti Aayog CEO’s statement that ‘we have too much democracy’ or Agriculture Minister linking the laws to the “303-seat majority” reflect this value ethos and self- explain the rational of surprise-bulldozing of some of the “reforms” in the last few years, like demonetisation, lockdown without notice that caused as much misery to the migrant labour as the pandemic, and now the farm Acts and the Labour laws.
One of the fallouts of this strategy is social discord and that makes ‘reforms’ counterproductive because these first create a conflict and thereafter try to find a solution that would fit the problem, as is being now attempted in the prolonged negotiations.
It is not disputed that agriculture needs transformation and private enterprise and capital could consort with government to contribute in its development. But the way the ‘reforms’ were structured and thereafter hurriedly notified, has created a toxic shroud regarding the motives and turned the entire process into corporates Vs peasants, putting private participation in jeopardy even for future.
Why were the laws enacted and do these address the core ills that ail our agriculture or are illusory because the fundamental problems like crop diversification, cultivation-costs, subsidies or shift of population from agricultural to non-agricultural sectors, declining water table, soil health, etc have remained unattended. Let me explain.
The most serious issue is over-crowding – over 50% of the population is dependent on agriculture while farms contribute paltry 17-18% to GDP. Consequently, the average farm household income is Rs. 6500/- per month, resulting in farm indebtedness and suicides. In 2019, as per the National Crime Bureau figures, 10281 persons associated with agriculture committed suicide or 28 suicides per day. The solution is shifting of substantial population to non-agriculture professions.
Secondly, the cost of our produce – wheat, rice and sugar – to mention few is higher than the prevalent international prices. The landed cost of wheat at our ports from say Australia or Canada is lower than the cost of wheat transported from north India to south. The high price-tag as fixed by MSP, despite low labour costs, is due to higher cost of agro-inputs such as fertilizer (despite subsidy), cost of fuel such as diesel, agro-chemicals, agro-equipment. However, these issues remain unattended.
Punjab and Haryana which are leading the agitation suffer from a geo-political curse. In the years of public sector, government investment alluded them due to hostile borders. That affliction continues. This year Pakistan is importing 2.9 million metric tonnes of wheat from far of countries and so is Afghanistan. Export via road from Punjab is competitive due to low transport and handling costs. China has also sought Indian rice, to reduce its dependence on south east Asian countries. But we cannot deal with them for reasons of the national cause.
Thirdly, it is alleged that agriculture is highly subsidized, though subsidies in US and other developed countries are much higher. These have adverse consequences such as Punjab’s free electricity is causing steep fall in sub-soil water table. The problem begs a solution, but the ‘reforms’ remain silent. Incidentally, Punjab pays the cost of free electricity from its budget and, thus ends up subsiding the national buffer food stock.
Fourthly, they say good bye Punjab, we do not need your wheat or rice. The government has 3.5 times higher buffer stock than what is required. This bravado, however, is delusional because two successive failed monsoons would send all scurrying back to wheat and paddy. Besides, surpluses exist due to low purchasing power of the population. Otherwise, the per capita per day availability of rice in 2019 was only 189 gms and wheat 178 gms.
Fifthly, what is needed is crop diversification. It needs capital investments but the annual allocation of funds is paltry 100 crores under diverse schemes. Instead of dealing with it on war footing, the new laws instead presume that once private players enter agriculture, market mechanism would trigger diversification. The laws alter the existing agrarian social- eco system and security, with state progressively withdrawing from the field.
The ‘reforms’ do not address the basic agrarian problems and address only trading, contract farming and stock-hording. They lay down a legal regime to create completely unregulated and taxation free private markets in competition with the existing APMC Mandis which are subject to taxes, thus creating an unequal playing field in the favour of corporates.
The reforms will also sound death of the rural development in Punjab and Haryana, which is sustained on market fee and rural development cess. Punjab’s annual income from these sources is about 4000 crores and it is used to fund rural infrastructure, particularly 5000 Kms of village link roads, agricultural research, storage godowns etc. The new laws do not provide an alternate source of revenue for the loss of this income as these take away the power of states to impose any fee or cess, by whatever name called.
This, in fact, is the fundamental difference between the new laws and the existing laws of most of the states that already permit private markets to operate. Some states also allow contract farming, and virtually no state bans its farmers from selling anywhere in India. But a false narrative has been created that the new ‘reforms’ create one nation one market, as if it did not exist before. Punjab farmers have been selling crops like Kinnow, potato, cotton etc all over India, just as Bihar sends truck-loads of Paddy to Punjab and Haryana because its APMCs were abolished in 2006 and private markets are not remunerative.
In an unprecedented non-political unification of diverse forces – farmers, landless labourers, Arhtiyas, ex-servicemen, artists, NGO’s, religious bodies etc – from all over, the farm agitation has remained remarkably peaceful, despite barbaric use of state power by Haryana to block them and thereafter a concerted effort to cause cleavage among them and painting the movement as Khalistanis, tukde tukde gang, terrorists etc.
In over 20 days, more than 22 farmers have died. The priority should be to diffuse the situation. One solution is to enact new laws incorporating the substantive demands of the farmers which government has virtually agreed to and also incorporate a repeal clause in it annulling the three existing ‘reform’ laws. The new enactment and annulment shall happen at the same time, thus meeting the demand of the farmers and government retaining its seemingly fragile and recalcitrant prestige.
Parallel to it, as suggested by Supreme Court, a think-tank should go into the entire gambit of agro- sector problems and suggest reforms. The question of legislative competence of the Central government to enact on ‘agriculture’ and agro- trade and commerce could be referred to Court under Article 143.
By :
Co Chairman S RI SINGH Ex Chief Secy. Pb. Govt.