The on-going farmers’ agitation on the borders of Delhi NCR, now in its 44th day (January 8), has thrown a spanner into the recovery process of the Indian economy in the wake of the devastation caused by the Covid-19 pandemic.
Unfortunately, there is a great deal of confusion about the agriculture liberalisation and deregulation legislation. Together they liberalise and deregulate Indian agriculture in the same manner as the landmark legislation of 1991 substantially liberalised Indian industry and business. They are designed to allow farmers to sell their produce to purchasers of their choice, allow them freedom to enter into production and commercial contracts with private industry and firms. And the third Act removes warehouse inventory ceilings imposed by state governments on commodities traders enabling them to buy and warehouse agri produce without interference from government inspectors.
Certainly this legislation will benefit the vast majority of the country’s 600 million-strong rural population whose average per capita income is one third of national income. Direct farm gate purchasing is in the public interest because horticulture (fruit and vegetables) produce valued at Rs.93,000 crore is wasted annually because of logistics and storage bottlenecks. Under these Acts a farmer can sell his produce to the highest private bidder or in APMC auctions, wherever he gets the best price. If prices fall because of over-production, he can sell to government at the prescribed minimum support price. This safety net has been retained.
Essentially, these Acts of Parliament integrate agriculture and industry. They allow farmers to enter into pre-production contracts with agri-processing companies to protect them against wild price fluctuations which will also benefit consumers, because food processing companies will quickly transform surpluses into long-shelf life processed foods. Fears of farmers being short-changed by corporates are unfounded as the latter will be bound by cast-iron contracts and also fear of media exposure. Amendment of the Essential Commodities Act is also in the interest of farmers inasmuch as it enables the reinforcement of India’s weak warehousing industry. Farmers will have the option of warehousing their produce for sale in lean seasons, and also have the option of monetising warehouse receipts.
Nevertheless the BJP/NDA government at the Centre is not blameless. With typical high-handedness it railroaded these revolutionary Bills, which affect the lives and livelihoods of 600 million rural citizens, without adequate debate and reference to farmers’ unions and leaders.
It’s important to recall that in the 1960s when the country was confronted with the prospect of famine, the farmers of Punjab and north India responded to minimum price assurances and saved the situation by engineering the Green Revolution. The least they deserved was to be taken into confidence and explained the necessary agriculture reform provisions of these three Acts of Parliament in detail. In the circumstances, the Central government should repeal and re-enact these laws after dialogue and debate in and out of Parliament as demanded by farm union leaders.