Economic
Highlights
New Delhi, 22 November 2021
Farm Bills’ Repeal
RECOIL ON POLITICS, ECONOMY
By Shivaji Sarkar
Finally, the three farm
bills are to be withdrawn as the nation goes to polls in Uttar Pradesh, Punjab and
three other States. Prime Minister Narendra Modi’s announcement will lead to a
sea change in the gamut of a year-long struggle by the farmers. Yes, it would
now be a direct battle for votes with the farm issues and the Prime Minister
taking the centre stage.
It is not an issue of
who wins or loses, but calls for a process where none has to go for an adamant
attitude that has caused over 700 deaths, innumerable conflicts and a political
atmosphere that had led to strong verbosity and millions of hours of media
debate. The farmers may be happy and see it as a victory at last, but may wait to
withdraw their agitation till the bills are formally withdrawn in the ensuing
winter session of Parliament.
Prime Minister lamented
that despite his concern for the farmers “We couldn't convince a section of
farmers despite best efforts. The goal of the three farm laws was to empower
farmers, especially small farmers”. There is a general relief and Modi can do
more by also taking this opportunity to scrap the whimsical NGT order of
scrapping 10-year-old cars, tractors and other vehicles.
The three bills in question are
the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill and
The Farmers’ (Empowerment and Protection) Agreement on Price Assurance and Farm
Services Bill, 2020 and the Essential Commodities Act amendment bill. The first
is on agricultural market reforms, while the second is about contract farming
provisions.
As the bills are withdrawn the
intense political battle that seemingly would continue is to pitch the campaign
plank for the elections. The Opposition may get emboldened as also the farmers.
The government would come out
with the plank of a responsive government and sabka sath sabka vikas. It
is not that only the Delhi borders were sealed by farmers and police of
Haryana, Delhi and UP, it has also created an atmosphere of uncertainty. The controversial
Republic Day rally in January 2021 led to many apprehensions and a situation of
conflict that was never envisaged.
The reverberating slogans and
counter slogans may warm up the poll pitch with curious voters observing each
of the movements. It would be yet another move to reestablish the brand
Narendra Modi by the BJP-NDA. The Opposition may try to do the contrary.
Ultimately, it would turn the elections into an interesting phenomenon.
Possibly it would also make any
government not to act in haste as it happened with the June 5, 2020 farm ordinances,
at the height of lockdown, leading to fears that corporate stranglehold to rise
as Minimum Support Price (MSP) to be withdrawn. In reality government increased
MSPs on all farm products.
Whether the Bharatiya Kisan Union make an
impact in the coming polls with its possible allies Samajwadi Party- Rashtriya
Lok Dal or just wither away also needs to be seen. Since 2018 and during the past
one year the BKU has been in the news in the northern States and particularly
UP, where all the parties have high stakes.
The bills had generated enough
corporate and foreign investor interest. It increased the hope of more
investment in warehousing though the farmers have the reservation of losing to
corporate and finally loss of livelihood. Several rounds of talks and its
failure had led to a kind of desperation as they feared that returns would
continue to fall.
Farmers refused to
accept the government’s offer of written guarantee on MSP and offer of levying
cess on the new private mandis outside the Agricultural Produce Market
Committee (APMC) mandis. Over the years, between 2013-14 and 2017-18, as
farmers’ return on their produce start reducing, the foreign portfolio
investment (FPI) is booming and funding for silo – giant
steel structures for storing grains for a longer duration - construction increases.
Since 1967, when APMC
Act was enforced, never have farmers been at such a distress and confusion.
Normally, despite not being able to sell at MSPs, they were not unhappy at the
returns. The MSP decided a floor price and provided the bargaining strength to
them against the market forces. In 2013-14, the paddy price was 58 per cent
higher than average input and labour costs. This margin shrank to 41 per cent
in 2018. The difference on maize reduced from 43 per cent to 25.6 per cent.
Indian farmers have reasons to be unhappy. Their
yields are low. World average for rice per kg per hectare in 2018 is 4679,
maize 5924, all pulses 964, arhar 852, soybean 2791, groundnut 1611, wheat
3425, barley 2951 and gram 965. The Indian average is rice 2638, maize 3070,
all pulses 757, arhar 757, soybean 1192, groundnut 1422, wheat 3371, barley
2693 and gram 956. The prices they get are less and as the cost is high,
approaching international markets is not easy.
In this backdrop, if it
is linked to FPI, the trend is surprising. In June, 2020, the FPI was Rs 11,736
crore. It doubles to Rs 22,866 crore in July. The three farm laws were
introduced as ordinances on June 5, 2020. In August as the farm bills were
introduced for passing by Parliament, the investments jumped to Rs 1,30,576
crore. About half the investments surprisingly came from two tiny countries,
Mauritius and Singapore. Another large investor was Netherland.
The State of Indian Agriculture 2015-16
(SIA15) of Ministry of Agriculture says in its preface, “in recent years the
agriculture and allied sector has been facing numerous challenges. The sector
remains constrained by low productivity, excessive dependence on monsoon and
weather conditions, continuing fragmentation of land and preponderance of
fragmented markets. A combination of these factors has led to episodes of
agrarian distress which have been widely reported”.
Various other issues such as toll roads,
building of silos and the falling farm GDP to 14 per cent may become poll
issues. How it would recoil on different political parties would be interesting
to watch. It might raise debate in all political parties, including the ruling
combine.
The election plank interestingly may become farm
issues though the BJP may like to keep it focused on Ram Mandir. In that case
issues of decline in GDP in the farm sector can take the centre stage. As it
appears now, farm growth and structural changes in economy would be at the centre
stage but many new political issues may be added to the vexed problem impacting
the 2022 election results.---INFA
(Copyright,
India News & Feature Alliance)
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