STRATEGIC REVIEW OF INDIAN POLITICAL KALEIDOSCOPE ON FARM REFORMS 2020

 

STRATEGIC REVIEW OF INDIAN POLITICAL KALEIDOSCOPE ON FARM REFORMS 2020

 

Kaleidoscope – a constantly changing pattern or sequence of elements.

 

Context

It is comparatively more complex to guard a nation from internal threats than those arising externally.

The security of a nation is in extreme jeopardy when the very class which should be securing it puts self-interest before national interest.

Agriculture sector is vital to national security, it accounts for 16 % of the GDP and impacts the economic interests of 70 % of the population subsisting on income from this sector.

The shenanigans of our political leaders over Farm Sector reforms in the past decade, with their kaleidoscopic viewpoints based on in power/out of power principle of opposing for sake of opposition, best showcases the danger posed to our national interests by the very class which should be its supreme guardian.  

Passing of the three Farm Acts and the agitation against it is very interesting.

The current ruling dispensation at the Centre which has got the three Acts passed by the Parliament, had initially opposed the proposal when first mooted in 2013, when it was the sitting opposition in Parliament.

Whereas support to the agitation against these Acts is being provided by the very political grouping that had proposed it initially when it was the ruling dispensation at the Centre.

 

Backdrop

In June 2020 the central government promulgated three Ordinances for the Farm sector:-

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 to facilitate barrier-free trade of farmers’ produce outside the markets notified under the various state APMC laws.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 to define a framework for contract farming.

The Essential Commodities (Amendment) Ordinance, 2020 to remove stock limits on agricultural produce except under defined extraordinary circumstances.

In September 2020, the above Ordinances were replaced by three Acts passed by the Parliament of India:-

Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act (FPTCA) to facilitate barrier-free trade of farmers’ produce outside the markets notified under the various state APMC laws. It also bars State Governments from levying fees on purchase or sale of agriculture produce outside the notified markets functioning under State Produce Market Committees.

Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act (FAPAFSA) to provide for a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework in a fair and transparent manner and for matters connected therewith or incidental thereto.

Essential Commodities (Amendment) Act (ECAA) has removed commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities and has also ipso facto ended the imposition of stock-holding limits on these commodities except under extraordinary circumstances.

By October 2020, widespread protests commenced against these Acts by farmers in the country on grounds that in the long run they will facilitate entry of large corporate organisations into the farm sector and may likely lead to dilution of Government support for specified agriculture products, thereby making the marginal farmers vulnerable to exploitation by large marketing organisations.

 

Historical Context

Historically the agricultural produce market in India has experienced Government intervention in varying degrees to keep their prices in check and affordable. Over period of time the low prices led to the farmers becoming vulnerable to exploitation by moneylenders and intermediaries involved in wholesale trade of agriculture produce.

A model Act for trade in agriculture produce was first passed in 1938, during British rule, for implementation by various States. Very few States implemented it.

Post-independence, under the new Constitution, the subject of Agriculture was placed on State List whereas production, supply and distribution of products, including agriculture, was placed on Concurrent List.

In 2003 an Agricultural Produce Market Committee (APMC) Act 2003 was passed by the Parliament, with the object to ensure that farmers are offered fair prices in a transparent manner. It empowered state governments to notify the commodities, and designate markets and market areas where the regulated trade shall take place.

The Act also provided for the formation of Agricultural Produce Market Committees (APMC), responsible for the operation of these markets. No other person or agency was allowed freely to carry on wholesale marketing activities in designated areas.

 

Some Relevant Facts of the Case

Only 17 States adopted the model APMC Act 2003.

Only 7% households sell crops to procurement agency (70^th round of National Sample Survey).

Only 10% of total crops are sold at MSP (70^th round of National Sample Survey).

Annual revenue, in INR, earned from agriculture sector is 1500 crores for Rajasthan and 3500 crores for Punjab.

There is substantial regional inconsistency in farm produce yields (kgs/ha), pointing to latent inefficiency in the sector. (TOI, 8 December 2020)

Rice (Kharif), national average yield is 2638 against highest yield of 4132 in Punjab.

Wheat (Rabi), national average yield is 3371 against highest yield of 5188 in Punjab.

Maize (Kharif), national average yield is 3070 against highest yield of 7258 in Tamil Nadu.

Pulses (Kharif), national average yield is 757 against highest yield of 916 in Madhya Pradesh.

Barley (Rabi), national average yield is 2693 against highest yield of 3597 in Rajasthan.

Lentil (Rabi), national average yield is 731 against highest yield of 1026 in Uttar Pradesh.

Indian agriculture produce is expensive as its average yield is considerably lower than international yields, making it internationally uncompetitive.

Average farm returns are falling in India.

 

ASSESSMENT

 

Answers to following queries may lead to logical deductions:-

 

Does the model APMC Act 2003 protect Farmers interests?

Is farming in India economically viable without Government support?

Are the provisions of the three Farm Acts against interests of Farmers and States?

 

 

Inadequacies of APMC Act 2003

Government intervention in any economic sector always comes at a cost. No matter how well-meaning its intervention is, the delivery to the beneficiary gets mired in inefficiency fueled by corruption, and it is difficult for large scale corruption to survive without tacit political patronage.

The outcome of the implementation of the APMC Act 2003 is no different.

Inadequate storage infrastructure, deliberate bureaucratic delays, middlemen-procurement agency-politician nexus, have ensured that the benefits of the APMC Act and the Minimum Support Price (MSP) are withheld from the intended beneficiaries.

According to 70^th round of National Sample Survey only 7% households sell crops to procurement agency and only 10% of total crops are sold at MSP. The intended beneficiaries have not been able to benefit.

The Act has gone on to create an unintended monopolistic trade infrastructure, in the form of APMC ‘Mandis’, detrimental to interests of farmers by denying them the right to choose their buyers.

The Act no longer protects the interest of the farmers.

 

Economic Viability of Farming in India

Government intervention is basically guided by principles of revenue generation or saving revenue expenditure, unless forced by political considerations. Altruist motivations to Government policies exist only in realms of fantasy.

Even where the underlying principle is to distribute largesse amongst profiled beneficiaries, the inefficiencies of the system and corruption, with tacit political patronage, skews the intended impact.

As a point in case, the petroleum sector prices are regulated on the higher side by the Government to enable it to generate maximum revenue.

Whereas in the agriculture sector the underlying principle has been to manipulate the prices on the lower side, so as to enhance affordability. This has been ensured by restricting farmers’ rights to sell his produce to the buyer of his choice.

Over a period of time Government License-Permit Raj policies and malpractices by Government sponsored agencies have impeded farmer initiatives, resulted in continuing of inefficient agricultural practices, lower farm holdings, and stagnation in yield.

To say the least, the Government intervention in the agriculture sector has been detrimental to the interest of farmers.

Released from Government policy fetters, the agricultural sector is capable of sustaining itself economically.

 

Concerns on the three Farm Acts

Looked at holistically, the three Acts have released the Farmers from the restrictions placed on their rights to sell and purchase their own produce. However the earlier model APMC Act 2003 was also drafted to secure Farmer interests, but succeeded in only bonding them.

It is the historical precedence of being short changed by the Government agencies which is the major factor behind the real and perceived concerns of the farmers.

Gradual withdrawal of MSP support by the Government, likely entry of Corporate houses into the agricultural sector viewed as detrimental to interests of traditional farmers, the likelihood of legal contract redress mechanism becoming skewered in favour of corporate houses, are some of the major concerns voiced by the Farmers.

The States are concerned with the loss of revenue from agricultural produce, a state subject.

The bureaucrat-middlemen-politician nexus is concerned with the loss of their well-developed patronage system gains.

Once separated from partisan political interests, the issues are resolvable.

 

Deductions

There are genuine as well as perceived concerns of the Farmers and the states which need to be addressed.

There is credibility gap between the Farmers and the Government, premised on historical past.

The credibility gap is being exploited by the partisan political interests.

The three Farm Sector Acts 2020 are laws duly passed by the Parliament of India by majority vote.

Protests against the three Acts, by blocking public ways and spaces, other than at designated spaces, are underway without exhausting recourse to judicial remedies.

Attempt to force recall of laws duly passed by the Parliament is a threat to the rule of law and the very Constitution.

Supreme Court has ruled as recently as 07 October 2020 that public protests can’t occupy public ways and public spaces.

The manner of protests is clearly violative of law.

The rule of law is clearly being held to ransom at the altar of political expediency.

 

Way Forward

A prolonged agitation will exacerbate rural-urban divide.

It is a certainty from the nature of well organised agitation that they are in for the long haul.

Allaying the concerns of the States and the Farmers needs to be handled sensitively.

However, an alarming rise in frequency of protests impacting the fabric of the society and nation at large is evidenced.

This is evidence of a deeper malaise. The reluctance or inability of the law and order machinery to handle such agitations effectively.

Past trends are indicative of stifling political hold over the law and order machinery, whereby criminal cases against political and agitation leaders are called off after change of political guard in the Government.

The political class clearly places their own interests foremost, ahead of even National interests.

There is a strong case to remove law and order machinery from political control and replace it by a constitutional independent Police Commission at Centre and States.