Farm Bills: How Narendra Modi is revolutionising India’s agriculture sector

20200908 Top News Narendra Modi
Narendra Modi, India’s Prime Minister
Image Credit: ANI

Once again, India’s Prime Minister Narendra Modi did the impossible when his government pushed-through three ambitious bills in the Parliament this week. The aim is to overhaul the system of agricultural trading and businesses (mainly of wheat and paddy in northern states of Punjab and Haryana).

One legislation will introduce a framework for contract-farming to attract corporate investments in Indian agriculture while another bill proposes to remove the upper limit of holding stocks of essential commodities except in times of war, natural calamities or a steep rise in price.

The politics of the farming community, made up of 150 million families, influences national politics and the electoral fortune of parties, so reforms in the farm sector are the most difficult political call to take. For long, it was an impossible one. Modi has gone many steps further with these three progressive legislations but its highly risk-fraught as most trendsetting decisions are.

In the last 73 years, no Indian political leader has shown the nerve to tax even the rich farmer’s income who live a luxurious life. However, more than 70% Indian farmers, even though enjoying the godly status of “annadata”, are poor and hold less than 3 hectares of land. These farmers have been at mercy of rain and local middlemen, who lend money to him and dictate where and at what price to sell the grains.

Indian farmers know how to produce without much help of high technology but don’t know how to market their produce and get good returns. Modi is tweaking this ground situation. Two of the three Agri-reforms bills were passed amid din in Upper house of Parliament.

After getting more brickbats then credit due to poor implementation of demonetisation and GST, Modi has put a lot at stake in his reforms gamble. The prime minister is doing his utmost to break the status quo

– Sheela Bhatt

It will be challenged in the Court for not adhering to Parliamentary practices. However, the Opposition served a self-goal when they indulged in physical aggression in trying to stop the deputy chairman of Upper house from rushing in to clear the bill by circumventing rules.

The extreme behaviour shown by the ruling party and the members of the Opposition in the Upper house shows the national importance of Modi’s politics. It rushed through the bills thinking that grim COVID situation may not help political opponents to hit the streets to protest in big numbers.

Opposition up in arms

The reforms are so far-reaching in its scope that more than 18 parties have joined hands to oppose the bill which they consider is the death warrant of Indian farmers as the big fish of the agro-industries would enter the market with money bags and control price mechanism, hitting marginal farmers.

BJP’s right wing politics, they allege, is sponsored by corporates who are eying land of poor farmers. The critics of the bills claim the reforms will remove dhoti-kurta clad old set of middlemen with a new set of suited-booted middlemen of big agro-processing companies.

Congress and other parties are unlikely to let the ruling party have an easy passage. While showing political heft and appetite, the Modi government took up the debates on farm reforms inside the government around July 2019. Under the nine-member committee of Chief Ministers, it examined how to double farmers incomes.

Since last year P.K. Mishra, Principal secretary to PM, Dr. Ramesh Chand, agriculture expert in Niti Ayog and agriculture minister Narendra Singh Tomar have relentlessly worked behind the scene to form the strategy. Top brains of firms — from Amul to ITC — and many international experts were consulted by the advisory committee. Uttar Pradesh and Bihar have ‘work plan” ready to implement the changes under the new farming laws.

Contrived pattern of farming

The government’s counterarguments are that the farm practices in India haven’t changed much on a large scale since the Green Revolution of the late 60s. The Indian government spends $22 billion annually on agriculture but its efforts go mostly on wheat, rice, sugar, cotton and milk-related activities. The country has 40 agro-climate zones and 16 biodiversity zones, and is losing out badly in the international market due to contrived pattern of farming. Most farmers sell either to government’s procurement agency or to Agricultural Produce Market Committee (APMC) mandis. The new laws have thrown direct competition to APMC mandis and their middlemen.

The reforms are protested more loudly by the farmers of Punjab and Haryana. It will impact the rich and medium farmers who fear subsidies will go, eventually. More than 95% paddy growing farmers of Punjab and 70% from Haryana get maximum benefits. Farmers from these states have been paid Rs80528 crores as Minimum Support Price of wheat and paddy in 2020 by the Central government. According to agriculture minister Narendra Singh Tomar Rs7 lakh crore has been paid to Indian farmers as MSP in the last six years.

The current scheme of the opening of the market is mainly headache for Punjab and Haryana farmers and around 25000 adatiyas who are prosperous under the current system. Lately, these mandi boards have become local power-centres. Even to get elected into the board of the mandis is a challenge. Their election is as dirty and as fiercely fought as elections for assembly and parliament.

Modi’s challenge to vested interests

Modi’s bills have thrown a direct challenge to these well-entrenched vested interest of Mandi managers. Mandis have become more political and less progressive. Many Mandis has refused to join E-National Agricultural market, giving the excuse that they cannot follow lab testing etc.

The new bills will change the status quo. In a short term, the Mandis will survive but in a long term with these two acts, outsiders will get level playing field to take on local bullies of the agro-based-businesses as the new law doesn’t allow imposing of tax on trade outside mandis.

No government in near future can dare to undermine MSP regime as India needs to help its poorest farmers and also build a strategic reserve of food in a crisis like war or national calamities. The government has dismissed the opposition demand to issue ordinance or mention in the laws stating that all trading outside the Mandis will be above MSP. Government claims that the APMC Mandis do not give fairly higher price than MSP. Right now, for a poor Indian farmer, it’s a buyers’ market. Modi’s bills are trying to make it a seller’s market.

It’s a tall order, not easy to achieve due to international competition. There is no guarantee that buyers from outside will not squeeze farmers as international agribusinesses are fiercely competitive and shamelessly profiteering. No government has been able to tame these corporates. The biggest issue is whether new buyers will throng to markets with fresh investments or not? Right now — with the struggling Indian markets — none can be bullish about it.

After getting more brickbats then credit due to poor implementation of demonetisation and GST, Modi has put a lot at stake in his reforms gamble. The prime minister is doing his utmost to break the status quo.

Sheela Bhatt is a senior Indian journalist. She is based in New Delhi.

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