The journey of reform is never easy. Substantive and structural reforms pose electoral challenges but crises always create opportunities for change and the pandemic offered the central government an occasion for reform.
The 1991 liberalisation, for instance, was passed in the backdrop of a balance of payments crisis. It was a significant step towards modernising India, but, Narasimha Rao, the then Prime Minister lost a significant amount of support.
Similarly, the farm bills rolled out by the government in September of 2020 were long overdue. It is the culmination of two decades worth of agricultural reform thinking starting with the Shankarlal Guru Committee, a high-power committee on agriculture marketing set up by the government of India that first advocated for a more liberal agricultural marketing structure in 2001.
IMF’s chief economist, Gita Gopinath, argued these laws have the potential to increase farmer income. She said, “Being able to sell to multiple outlets besides the Mandis without having to pay a tax. And this had the potential to raise, in our view, farmers’ incomes.”
But for a law to be effective and accepted by all, it needs to satisfy three criteria: representation, protection of rights, and resource allocation. The three laws protect rights and improve resource allocation, but the laws were passed with disregard for representation safeguards.
The Farmer’s Produce Trade and Commerce Act increases the number of buyers in the agricultural market. It allows private market yards and allows farmers to sell their crops across state lines. This inevitably improves the rights of farmers since now buyers need to compete with each other for limited farm produce. The Farmers Agreement on Price Assurance and Farm Services Act allows contract farming which reduces the risk of price fluctuations and allows both buyers and farmers the safety of a guaranteed price and guaranteed volume of produce.
The Essential Commodities (Amendment) Act limits the government’s ability to control to impose stock limits and reserves it only for extraordinary circumstances like war, famine, calamity, or extreme price rise. This will increase investments in warehousing since there is less risk of government restrictions being imposed on grain storage.
So, the question is if the Acts are good for the farmers, why is there a resistance to it? The problem lies not in the content of the Act, but in the way, they were made into laws.
What the government could have done better
Shekhar Gupta in a recent article denunciated how the Bills were not marketed politically. “The days of incremental reform by stealth are over,” he stated aptly. Given the milieu of political unrest India has been witnessing since 2019, the government should have taken bolder and clearer steps to communicate with the states and the farmers what the new Bills would do for the agricultural sector.
Instead, the government passed the Bills hastily through a mere voice vote amidst pandemonium in the Parliament. It didn’t even send the Bills to parliamentary committees. The Report of the Committee on Doubling Farmers’ Income was published in September 2018 and the current reforms find support in this report. However, there was no open consultation and feedback period on the specific language of the Bills. No stakeholder meetings were held to discuss these reforms and no consensus building was done to garner support for these reforms.
All of these factors together did a great disservice to the entire democratic process of lawmaking. The farmers and the farmer’s unions were not informed about how the system replacing the APMCs will be good for them in the long run. There is a fear that the entire APMC system and the existing minimum support price (MSP)-based government procurement system could end.
Any Bill should, ideally, have a period of open consultations where the public at large and impacted stakeholders get the opportunity to comment, criticise and challenge the language and intent of the Bill. This not only improves the legitimacy of the proposed law but allows for feedback in a more systemised and productive manner. This did not happen with the farm laws. What followed after was the farmers’ protest that has swollen over the months and the continuing stalemate between the central government and the farmers union.
Is a proper solution emerging?
The Supreme Court stepped in, placed a stay order on the laws, and created a committee to review it. While the Supreme Court seems is allowed to review laws, it is only meant to be on constitutional grounds. When it stays a law there is a need to provide a reason why it thinks it is prima-facie unconstitutional. In this case, the court did not do that and is instead involved in debates of merits and demerits of the policy. But that is not the courts’ mandate.
The Supreme Court should probe the constitutionality of the law, since questions about federalism and legislative procedure remain, a committee to discuss policy benefits is an overstepping of its authority.
The committee has, however, now been formed. It has the opportunity to do what the government should have done before passing this Act. It can listen to stakeholder concerts and assess their merit, get feedback from the public and experts and compile this information for the government to consider.
This article was originally published in India Today on February 1, 2021, and written by authors Prashant Narang and Sreya Sarkar.