Pride, prejudice and policy reform: A peek into the new Farm Act

There is an old adage: justice should not only be done, it seem to have been done. It’s because justice is supposed to be an act of genuineness and a perception of fairness. There is little doubt that the small and marginal farmers have remained under perennial stress and it’s about time policy reforms are initiated to improve their status. Agriculture is becoming economically unviable specially for the small and marginal farmers who often fall under debt trap and consequently bear tremendous financial burden. Thus, their demand for justice is undisputable. But when the government has come out with such a progressive and transformative Act meant to ensure farmers’ freedom from the exploitative system of mandis and middleman, why the farmers of Punjab and Haryana see it as an unjust intervention? Is the government not being effective in perception management or have the farmers have gone too far?

APMC and MSP are the two major bones of contention. Despite repeated assurances agitating farmers think government is trying to withdraw MSP and close down APMC. This is despite government’s recent announcement that it’ll buy crops at 1.5 times of the cost of production. Beyond petty politics and vested interest experts on agriculture and macroeconomics have often cautioned against constantly raising MSP as it may push up inflation and add to fiscal deficit. Its overall adverse effect will boomerang and eventually pinch all including the farmers. However, looking at the large scale chronic distress in the farming sector the political expediency to continue the provisions of MSP can’t be questioned, at least for now. The government has reiterated several times that it does not intend to withdraw the Act. But is the policy of MSP and APMC Act really helping all the farmers in equal measure all across India?

Niti Aayog Report of 2016 titled
Evaluation Study on Efficacy of Minimum Support Prices (MSP) on Farmers is an eye-opener. Its all India finding reveals that in Bihar farmers know about MSP but the awareness about the time of its announcement is quite low. In Gujarat, only 33 percent of farmers know about MSP and the time of its declaration. In MP the awareness of MSP is negligible. As per the findings of the Report, in UP all farmers are though aware of MSP but they don’t know about it before the sowing season making the provision ineffective. The same is the case with Uttarakhand. In West Bengal farmers do not sell their produce at MSP and the process is carried out with the help of intermediaries, the report mentions. In a nutshell, despite successive governments’ backing MSP still doesn’t have pan-India efficacy. For a fair insight, some comparison will be necessary.

Bihar with 76 percent dependence on agriculture, repealed the APMC Act in 2006. Out of its
93.60 lakh hectare gross area, its gross cultivated area is 79.46 lakh hectare on which it produces food grains, fruits and vegetables. Ranking among the least urbanized and industrialized states, agriculture is its mainstay. It’s interesting to note that despite abolishing APMC Act Bihar’s agriculture growth 7 percent has been much higher than the cumulative national figure of 2 percent during 2018-19. The state recorded a growth of 4.14 percent in food grain production with a total production of 163.12 lakh tonnes in 2018-19. The Gross State Domestic Product (GSDP) of Bihar from agriculture grew from
Rs. 62067 crore in 2011-12 to Rs. 72393 crore during 2018-19. Similarly, the Net State Domestic Product (NSDP) from agriculture, fishing and forestry almost doubled from Rs. 57852 crore in 2011-12 to Rs. 109178 crore during 2018-19. The total NSDP of the state during the year was Rs. 513881 crore. In a nutshell, the abolition of APMC or the limited benefit of MSP have not created any havoc to the farming sector in Bihar. The growth rate of Bihar’s economy in 2018-19 was a striking 10.53 percent (at constant prices) and 15.01 percent (at current prices). As against that the growth of Punjab was 5.3 percent during the same year despite being a major agriculture state and having APMC and MSP in place. On all India basis Punjab, along with Haryana also tops in terms of procurement of wheat and rice by FCI. However, agriculture being a state subject states are also entitled to have their own policies. Comparisons are not meant to create conflict, but they give insight for making equitable national policy.

Governments are expected to ensure both, food security and farmers’ interest. However, it can’t be achieved without bringing fundamental policy reforms. In a country where policy reforms are few and far between, moving the nation on a higher growth trajectory is always difficult. One can’t agree more with the Prime Minister that we can’t build new century with old laws. The United Nations in its agenda for 2030 sustainable development also emphasizes the need for
policy innovations for transformative change. So, reforms can’t be pushed back. One can’t predict the outcome of this agitation but the ongoing discussions and debates have at least opened up the underbelly of the farming sector to a common man. Now he can identify the caucus, the exploitative systems, outdated policies and the vested interest groups who keep millions of our small and marginal farmers in permanent quandary. The Act just provides an alternative without demolishing the existing edifice. It may take a little while before farmers appreciate what transformation the new Act may bring to their life and how it’ll make them future ready.

(Author is a Senior Faculty of National Institute of Design, Ahmedabad. Views are personal)

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of