By supporting the Indian farmers, celebrities such as Rihanna and Greta Thunberg have given a new stir to their protests. Their criticism of Indian Prime Minister Narendra Modi’s government also marks a low point in India’s global standing.
The ruling Bharatiya Janata Party (BJP) could have rectified this but it chose not to. This opportunity came its way in the form of the union (central) budget 2021 that it presented on February 1, 2021 and which singularly failed to address the concerns of the protesting farmers. Rather than amending or rescinding the controversial farm laws that have brought farmers from the northern Indian states of Punjab, Haryana, Uttar Pradesh and Uttarakhand to the streets of Delhi, the government introduced nine new measures to support agriculture in the central budget. The farmers, as well as the opposition parties, instantly rejected these measures as ‘pro-corporations’.
Almost all the opposition parties, including the Indian National Congress, and the Aam Aadmi Party which rules Delhi, are supporting the farmers. They walked out of parliament during the budget session after being denied the permission to discuss the farmers’ agitation.
The government, on the other hand, has further toughened its stance. After the Republic Day ( January 26) debacle – when protesters on tractors broke through security cordons and managed to reach the Red Fort – Delhi has been turned into a fortress with multi-layered barricades marking its entry points. The protesters have been boxed in at Delhi’s border with Uttar Pradesh. These measures, however, did not stop them from giving the call for a strike on February 6.
So why is the BJP government treating Indian farmers like traitors? And what has made north Indian farmers protest amid Covid-19 and during the biting cold of winter?
To find the answers to these questions, we have to go back to the 2019 election when Narendra Modi promised to double the farmers’ income by 2022. The BJP government that came to power after that election believed that the root cause of rural poverty and ‘farm inefficiency’ in India was a slew of policies implemented in the 1950s and the 1960s which, among other things, set minimum price for a host of crops and obliged farmers to sell their harvest only at designated wholesale markets. These policies also had the effect of barring private companies from entering into long-term contracts with farmers for the supply of agricultural produce.
In an attempt to reform the agricultural sector, the Indian government promulgated three ordinances in June 2020. The ordinances ostensibly freed the farmers from selling their crops to government-licensed traders at the government-announced prices. Now they could sell their produce to anyone at any price and had the liberty to sign long-term supply contracts with restaurants, super markets and the producers of packaged foods. The ordinances also provided a legal framework for electronic trading of agriculture commodities and allowed traders and industrialists to stockpile food.
In September 2020, the ordinances were presented in the Indian parliament where, amid loud calls by the opposition to debate them thoroughly, the ruling party hastened to pass them as laws.
Prime Minister Modi claims these laws will free the farmers from the clutches of bullying middlemen. The farmers believe otherwise. They fear that big agricultural corporations like Reliance will grab their lands and deprive them of their livelihood.
How real are their fears?
More than 86 percent of India’s cultivated land is owned by small farmers who, on average, have two hectares (five acres) of land. A middleman (aarrthi), no matter how exploitative, is their friend in need since he lends them money without any collateral for all their financial needs. He, admittedly, charges exorbitant rates of interest on the credit he extends and uses very harsh methods to get his money back but he gives farm inputs to farmers on credit, purchases their produce on a pre-set price and does grading, labelling and marketing for them. Sometimes, he also buys their standing crops, essentially providing insurance to them against all kinds of risks – including bad weather and pest attacks.
The farmers are apprehensive that the government’s farm laws will turn the existing system of agricultural markets non-functional and leave small land owners at the mercy of corporate giants with whom they will never be able to bargain or negotiate on an equal footing. Their fear is also rooted in the fact that the new farm laws do not guarantee a minimum support price which will leave them vulnerable to the vagaries of the market and price manipulation by bulk buyers.
The farmers, therefore, would rather have the devil they know – that is, the middleman – than the devil they do not know and cannot even meet in person – that is, the corporations.
The farmers also have strong worries about the way contracts with corporations will work under the new laws. These contracts do not need to be in writing and disputes arising out of them will not be resolved by courts but through district administrations. Small farmers, mindful of the little influence they can have on district administrations, fear that they will always be on the losing side given the financial heft and the political clout that corporate giants enjoy.
Lastly, the farmers are scared of the capacity that the corporations have to hold and stockpile. They may buy agriculture produce at cheap rates during the harvesting season but stockpile it in order to create shortages and make prices rise.
The farmers, in fact, are not the only losers from the new farm laws. The state (provincial) governments and the middlemen are the other major stakeholders which will also lose out. Under the old system, the state governments used to get 6-7 percent market fee from the trade of all the produce within their jurisdictions. For instance, the government of Indian Punjab earned $10-11 billion as market fee in 2019. Likewise, the middlemen earned 2-2.5 percent commission on the trade of agricultural products under the old system. They will be deprived of their commission as well as their socio-political influence over farmers (which in itself is not something entirely undesirable).
The BJP government not only overruled the parliamentary opposition while passing the farm laws, it also did not bother to consult the three major stakeholders: farmers, state governments and middlemen. After more than twelve rounds of negotiations between the union government and the farmers’ representatives, the impasse still persists. The farmers do not accept anything less than a scrapping of the laws. The government, on the other hand, is only willing to defer their implementation by two years.
So, what’s next?
Agriculture marketing certainly needs reforms in India – as well as in Pakistan. The systems created during the previous century’s mechanization of agriculture cannot be adequate for the 21st century’s digitized economies. These reforms, however, can never be successful if their brunt has to be borne by small farmers who form a vast majority of the farming community in both the countries.
The indecent haste with which the Indian government passed the farm laws and Narendra Modi’s stubborn stance towards the farmers’ protests exhibit the ruling party’s disdain for developing a consensus. Whether the BJP realizes it or not, its failure to address the farmers' worries now runs the risk of derailing its entire economic agenda.
And therein lies an important lesson for decision-makers in other countries of South Asia: don’t leave out the most vulnerable sections of society while making policies that have a direct bearing on their lives.
The writer heads the Sustainable Development Policy Institute.
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