On Agri reforms: Setback for reforms

News: Farm groups have ended the protests against the three agricultural laws.

The Green Revolution policies have benefitted only those who grow wheat, rice, and sugar and in limited regions. These policies offered heavily subsidised inputs and an assured market and price for their products.

For the majority of the farmers growing other crops and dependent on the monopolistic licensed marketing system, it has been a case of diminishing returns. For instance, according to the data released by the statistics office, farm income growth for (2013-2019), the all-India average earning per household stood at Rs 8,000 to Rs 10,000.

By repealing the laws, the government has missed a big opportunity to introduce meaningful reform in Indian agriculture to increase farm incomes.

Why repealing farm laws is a setback for reforms?

Price support schemes were introduced as a solution to increase farm incomes. However, this proved of limited value and have imposed heavy burdens on government finances.

Now, several states have started recognising that farmers urgently need marketing freedom to obtain better prices for their products and amended their marketing laws.

Had the farm laws been passed, it would have enabled this process on an all-India scale. However, such reforms will now have to wait.

What is the way forward?

First, the government should engage with farmers from across the country to find feasible ways to increase farm incomes.

Second, increasing the ambit of MSP could permanently damage the prospects of reform in the agriculture sector and must be avoided.

Source: This post is based on the article “Setback for reforms” published in Business Standard on 10^th Dec 2021.