The disruptive ruckus in the Rajya Sabha on September 20 over the passage of three Bills whose objective is to liberalise, deregulate and revitalise India’s moribund agriculture sector, was unwarranted and irresponsible. It’s incontrovertible that the farm sector in which 60 percent of India’s 1.35 billion citizens are employed, but which contributes only 16 percent of annual GDP, needs urgent reform. India’s rural citizens reap a per capita income of a mere Rs.40,925 per year, against the national average of Rs.1.35 lakh. The objectives of the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 and Essential Commodities (Amendment) Bill passed by the Lok Sabha on September 17 and by the Rajya Sabha three days later, are to undo this historical wrong.
The plain truth is that the belated liberalisation and deregulation initiative of 1991 which substantially ended licence-permit-quota raj in industry, completely bypassed the country’s massive farm sector. Consequently, to this day farmers aren’t free to sell their produce — especially horticulture produce — to purchasers of their choice. With agriculture a state subject under the Constitution, most state governments dominated by rural gentry, have enacted legislation preventing farmers from selling or mortgaging their land except to bona fide farmers, thus depressing its price and enabling large farmers to consolidate their landholdings.
Moreover, contract farming is prohibited and horticulture produce (fruit and vegetables) has to be sold in daily auctions supervised by 2,477 Agriculture Price Marketing Committees which are packed with kith and kin of rural politicians formed into self-serving cartels. Simultaneously to perpetuate distress sale of farm produce, state governments discourage establishment of private warehousing, cold chains and growth of downstream food processing businesses. The result is that only 10 percent of the agriculture produce of rural India is processed cf. 65 percent in the US and 70 percent in Brazil.
According to the well-respected economist Shankar Aiyar, agriculture produce valued at Rs.92,000 crore “perishes between farm gate and market gate” (New Indian Express, September 20). The outcome is huge differentials between farm gate and retail prices paid by the consumer, with middlemen and intermediaries the major beneficiaries of 21st century India’s primitive agriculture sector.
Therefore, these Bills which envision a free market for farm produce, and contract farming that will infuse new technologies into the rural sector, will ensure better farm gate prices. Yet it’s pertinent to note that the demand of the opposition parties is for referring the Bills to all-party standing committees of Parliament for examination and ironing out their wrinkles. Perhaps not an unreasonable request for such a major reform, which the BJP/NDA government should accept subject to time-bound deadlines.