Written by Arindam Gupta
Three Congress-ruled states, led by Punjab, are at loggerheads with the Centre over the new farm laws. All of them, under the directions of UPA chairperson Sonia Gandhi, used Article 254(2) of the Constitution to pass their own farm laws in the state assembly. Anticipating trouble in obtaining approval of the governor of the state and the President, as laid down in the Constitution to invoke such legislation, Punjab chief minister Amarinder Singh threatened to take the matter to the apex court. But with the passing of state laws in Punjab, the farmer community seems to be divided. Those who do not only produce paddy or wheat are dissatisfied with the state guarantee of minimum support price (MSP) only for the two major crops. There are 21 other listed crops for which a system of government procurement exists, although the procurement is confined more to the two major crops. Maize, sugarcane, sunflower and cotton-growers in Punjab, although no match with wheat and paddy farmers, suffer a lot due to lack of government procurement. With farmer unrest having originated in Punjab and later spreading to neighbouring Haryana, the current kharif marketing season in both these states face an unforeseen uncertainty.
The farmer unions, particularly in Punjab, have got a point to prove. They are tacitly supported by the state government as it is slated to lose revenues in the form of levies and taxes if the new laws are implemented. Punjab is infamous for a high amount of state levies, ranging in percentage from 8.50 to 14.50 for wheat and paddy. It has not even spared private trading by amending the state Agricultural Price Market Committee (APMC) Act in 2017, much before the new central laws brought in the provision of private trading. The whole of Punjab had literally become an unofficial state mandi. Neither in Chhattisgarh nor Rajasthan is the state levy so high. Haryana, presently ruled by the BJP, is unperturbed by the central laws at the government level.
However, the Jat community, which comprises 30 per cent of Haryana’s population and is dominated by large farmers, is agitating even without state patronage. In Rajasthan, Delhi, and Uttar Pradesh, the Jats constitute around 9, 5, and 1.2 per cent respectively of the population, against Punjab’s 21 per cent. The average farm-holding size in Punjab and Haryana (3.62 and 2.22 hectares respectively) gives farmers of these state a distinct character in contrast with the pan-India farm-holding size of 1.08 hectare, according to the agricultural census of 2015-16. So the small and marginal farmers of the other states, including Rajasthan and Chhattisgarh, who constitute an average 86 per cent of the farmer population, are not agitating.
But it’s the time to reassess the MSP system itself. Instead of MSP, the government was preparing for a direct income support scheme for farmers as hinted by late finance minister Arun Jaitley at the beginning of 2019. Walking in the same line, the government extended Rs 6,000 per year income support under the PM-Kisan scheme, irrespective of agricultural landholding, after having introduced it in December 2018. But the sharecroppers and landless labourers who do not own any land are kept outside the purview of the scheme.
Earlier, the Indian system of MSP has been challenged at the World Trade Organisation (WTO) for violating multilateral trading rules. WTO rules cap government procurement for subsidised food programmes at 10 per cent of the total value of agricultural production based on 1986-89 prices. But the M S Swaminathan Commission for Farmers way back in 2016 suggested a 50 per cent profit loading to an average weighted cost of production (from state to state). The target was to enhance the agricultural competitiveness of the small and marginal farmers of the country. But the cream of MSP is devoured by the paddy and wheat growers, comprising the large farmers of two smaller Indian states in terms of population, Punjab and Haryana.
There is no political backing against the new farm laws in other states from prominent anti-BJP chief ministers like Arvind Kejriwal or Mamata Banerjee. The former rather criticised the method of the Punjab state government in bringing its own laws. Due to the absence of a structured APMC system, the revenues of the other states are not going to be affected, nor do small marginal farmers have any significant MSP protection to protest about. The Shanta Kumar-headed high-level committee in 2015 estimated, most conservatively, that a maximum 6 per cent of farmers are covered under MSP, unlike others who estimate that it could cover anywhere between 15 per cent and 25 per cent.
MSP is not a panacea to the classical occupation, which has lost all attraction for younger generations even in a traditional house of agriculturists. The provision of contract farming, as envisaged in a structured manner in the new central laws, offers some hope. For a few localised major crops like soyabean in Maharashtra or groundnut in Gujarat, the farmers are already supplying corporates for commercial use through agents at higher prices than the MSP. A section of potato farmers in West Bengal and Punjab are also getting the same for Fritolay potato chips of Pepsico. The uncomfortable silence about MSP in the new farm laws led to the accusation that the Centre is likely to discontinue the MSP. In the wake of the protests, a host of cabinet ministers like Rajnath Singh, Amit Shah, the Union agriculture minister Narendra Singh Tomar and the PM clarified that the pre-existing system of APMC and MSP would co-exist with the added private trading segment.
But the government has to contemplate a suitable scheme for direct benefit transfer (DBT) on the basis of any suitable socio-economic criteria, instead of continuing with the MSP. There will be a question of proof for enlisting such beneficiaries and the benefit needs to reach all those employed in agriculture.
The writer is professor of commerce, Vidyasagar University, Midnapore
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