Indian Government vs Farmers: What experts think about new farm laws

Thousands of farmers have been protesting for nearly three weeks on the outskirts of the national capital against the three new farm laws enacted by the Centre. Several rounds of negotiations between the government and the protesting farmers have failed to break the deadlock.

The government says the new laws are part of the much-needed reforms in the agriculture sector that will improve the lives of farmers in the long run. However, the government said it's ready to make amendments to address the genuine concerns of the farmers but has ruled out repeal of the new laws.

Several experts think that the farm laws are a step in the right direction. However, there are many others who are not in support

of the new laws.

'Laws beneficial, but great communication failure on Centre's part'

Ashok Gulati, Former member of Prime Minister’s Economic Advisory Council

Noted agricultural economist Ashok Gulati, who was a member of Prime Minister’s Economic Advisory Council from 1999 to

2001, says the three farm laws will benefit the farmers. However, he thinks there has been a great communication failure on the

part of the Centre to explain to the farmers how these laws could help them. Political parties and social activists, he says, have

exploited this communication gap and launched a misinformation campaign.

Gulati feels the farmers of Punjab, who are at the centre of this agitation, should diversify their output instead of protesting for

MSP on wheat and rice.

He says: "For the last 50 years, Punjab farmers are largely producing wheat and rice and then selling it to the government and

Food Corporation of India (FCI). Before the GST (goods and services tax) reforms, there was almost 14.5% in tax etc on top of

MSP, so no processor wants to buy it from the mandi in these states. After the GST reforms, tax etc are still at 8.5% which

means profit margins are thin and increases the intermediation cost. This makes Punjab wheat totally uncompetitive. So, only

the government can keep the stocks."

He also pointed out that rice cultivation is depleting the water table by as much as 0.7 metres a year in central Punjab and there

is going to be the question of unsustainable agriculture in the state.

'Convince farmers they are being misled by opposition'

Swaminathan S Anklesaria Aiyar, TOI columnist

Noted commentator Swaminathan S Anklesaria Aiyar says the reforms by Modi-led government are "eminently sensible" and

the government should wait out the agitators. The Centre should convince the farmers that they are being misled by the

opposition, he says.

The farmers of Punjab, he feels, have benefited from government procurement of wheat and rice in a big way, but now they

should be encouraged to diversify into high-value fruit, vegetables and dairy.

He blames the Punjab farmers for lowering the water table by growing water-guzzling crops like rice in a low-rainfall state.

Quoting Ashok Gulati, Aiyar writes "Punjab farmers get annual power subsidies of Rs 8,275 crore and fertiliser subsidies of Rs

5,000 crore, averaging Rs 1.22 lakh per farm household. In addition, they get subsidised credit and PM Kisan grants. Their high

farm income translates to high land prices of Rs 50-100 lakh/acre. Industries do not invest in Punjab because land is

exorbitantly expensive.

"India’s average farm holding is only one hectare, which is why prosperity requires farmers to move out of farming into industry

and services. But in Punjab one hectare is worth Rs 1.25-2.5 crore! They may not look it, but the farm agitators surrounding

Delhi are lakhpatis in annual subsidies and crorepatis in assets."

Blog - Farmer agitation: Use iron fist in a velvet glove 'Reforms must, only dispute is over which strategy to pursue'

Andy Mukherjee, Bloomberg opinion columnist

Bloomberg columnist Andy Mukherjee agrees with the need for agri reforms and says the only dispute is over which strategy to

pursue. However, he does fear the "profiteering corporations".

Mukherjee writes: "Nobody doubts that for India to have a shot at exiting its lower-middle-income trap, farming must come out

of its sub-3% growth rut. Productivity of labour, land, fertiliser and water have to improve. Massive private investments need to

take place in storage and processing for the country’s 2% share of global agricultural exports to increase."

"The dispute is over which strategy to pursue. Markets or organizations? That’s an old dilemma, made famous by economist

Ronald Coase in 1937. Modi is leaning toward markets, promising to turn the entire country into a free trade area benefiting 119

million farmers and 144 million farmhands, plus their families. A large and growing number view this move as an end to

institutional state support, which they fear will allow profiteering corporations to rush into the resulting vacuum," he says.

Andy feels the government failed to explain the laws properly to the farmers, whose fears are not "entirely irrational." He says:

"A compromise solution would require consultation — something woefully lacking when Modi’s government rammed the bills

through a dubious voice vote in parliament in September. Even those who defend the reforms agree that both their intent and purported benefits should have been explained better. But it’s too late for public relations. A more tangible concession will

have to be made: an additional law, perhaps."

'No downside for the farmer, only significant upside'

Arvind Panagariya, former vice-chairman, Niti Aayog

Arvind Panagariya, who served as the vice-chairman of NITI Aayog between January 2015 and August 2017, strongly backs the

new farm laws. He says for the farmers, there is no downside and the upside is "significant".

He writes: "The purpose of the recent APMC (Agricultural Produce Marketing Committee) laws enacted by the central

government is to free up the farmer from the stranglehold of the APMC and allow him to sell his produce directly to the highest

bidder. One can understand that the commission agents who have guaranteed income from APMC transactions and the state

government, which collects taxes on the sales in the yard, especially procurement of grains paid for by the central government

and hence the Indian taxpayer, would be upset by the reform. But for the farmer, there is no downside and the upside is

significant."

Accusing the rich Punjab farmers of vested interests, he writes, "A more plausible explanation is that richer farmers, especially

from Punjab, see an opportunity in the protests to extract a legal guarantee for a lucrative minimum support price (MSP) on all

sales whether to the government or private agents. Quite likely, it is this intent that has led them to allege that the real intent of

the government behind the reform is to eventually withdraw procurement at MSP when in fact no such link has ever existed."

Strongly opposing any compromise, he says "Any rollback of the reform is bound to encourage vested interests to rise up

against other reforms."

'New farm bills are flawed'

Kaushik Basu, Former chief economist of the World Bank and ex-CEA, GOI

Kaushik Basu, who served as the Chief Economic Adviser to the Government of India from 2009 to 2012 during the United

Progressive Alliance's second term, feels the new farm bills are flawed.

"I’ve now studied India’s new farm bills and realise they are flawed & will be detrimental to farmers. Our agriculture regulation needs change but the new laws will end up serving corporate interests more than farmers. Hats off to the sensibility & moral strength of India’s farmers," he wrote sharing his thoughts on Twitter.