How to increase farm incomes & growth post repeal

News: Government has decided to repeal the three farm laws. The laws had the potential of transforming agriculture and farmers’ income. But now, agricultural growth will be a challenge.

What are the challenges facing agriculture and its growth?

India has reported the fastest agriculture growth of 4.4% in the 1980s when the green revolution was at its peak. Then there is the challenge of selling the output. Selling surplus in the Indian market will depress the prices and reduce farmer income. If we export the food surplus, the importing countries will put countervailing duties to counter or subsidies.

Diversion of food crops: In three decades starting from the 1980s, the area under food crop has fallen marginally only from 73.9% to 62.3%. Moreover, its prospects have been further hurt by the repeal of these laws.

What can be the solution to this challenge outside the domain of agriculture?

There are two main work areas:

-Creating gainful employment opportunities for the current farm population.

-Creating more income transfers for those who continue to remain in agriculture.

This will be aided by the fact that the government has enacted reform measures.
1) Insolvency bankruptcy code 2) Goods and services tax 3) Labour reforms and labour codes, 4) Competitive corporate profit tax

These measures supported by privatization and monetization of assets can help in job creation and accelerating growth.

What more needs to be done?

The government needs to create a liberal trade regime. This would augment the positive effect of the above-mentioned reforms. It would also dispel fears of any further rollbacks of reform measures.

The government needs to announce a program of import liberalisation. It should bring down the high customs duties in a phased manner. Further, it should enter pre-trade agreements with European Union and the United Kingdom.

These measures will help increase farm incomes and put India into a double-digit growth trajectory.

Source: This post is based on the article “How to increase farm incomes & growth post repeal” published in Times of India on 30th November 2021.