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Monday, December 06, 2021

Expending too much political capital on farm laws made less controversial changes difficult. Now Centre can take them up

A collateral casualty of the farm laws row was that they took away the focus from other reforms. Expending too much political capital on the farm laws made headway on these reforms difficult.

By: Editorial |
Updated: November 20, 2021 9:40:42 am
Now, the best, and possibly the constitutionally right thing to do is to leave agriculture marketing legislation to the states.

A collateral casualty of the farm laws row was that they took away the focus from other reforms. These, among other things, related to bringing urea under the nutrient-based subsidy regime, phasing out resource use-inefficient subsidies and replacing them with per-acre cash transfers, and moving away from crop-specific minimum “price” to “income” support schemes on the lines of PM-Kisan. Expending too much political capital on the farm laws made headway on these reforms difficult. On the contrary, the Narendra Modi government, in order to placate those agitating against or suspicious of its farm laws, ended up procuring almost 14.5 per cent more paddy and wheat in 2020-21, compared to the previous year that had also seen record minimum support price (MSP)-based purchases. The farm laws, far from making the stage conducive for more reforms, aroused a problematic demand from the streets: Enact a parallel legislation to make MSP a legal right, similar to the National Food Security Act.

That demand, hopefully, will recede to background, now that the government has decided to repeal the three laws. While the merits of the laws — giving farmers the choice to sell and traders/processors/retailers to buy from outside regulated APMC mandis, allowing both sides to enter into direct supply contracts and doing away with stockholding restrictions on agri-businesses — cannot be doubted, the political fallout and the environment of distrust that grew with the agitation became too serious to ignore. Economic reforms in India have been a story of stealth, and two steps forward one step back, while largely staying the course. The worst case scenario with the farm laws would have been their becoming the main issue in the upcoming state elections and the Centre repealing them along with accepting the demand for providing legal guarantee to MSP. That would have been not one, but three steps backwards.

Now, the best, and possibly the constitutionally right thing to do is to leave agriculture marketing legislation to the states. The Modi government can ask BJP-ruled states to reform their APMC laws to deregulate farm produce trading and enable contract cultivation. Once they do it, others are bound to follow sooner than later. The Centre can separately reintroduce the law on abolishing stockholding limits, to which farmers have no serious objections.

This editorial first appeared in the print edition on November 20, 2021 under the title ‘The other reforms’.

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