“What difference does it make to the dead, the orphans and the homeless, whether the mad destruction is wrought under the name of totalitarianism or in the holy name of liberty or democracy?”
― Mahatma Gandhi
Democracy or any form of government can only be holy if all the participants are ready to bend a bit for incorporating the stance of others. The elected government must have a strong say or else they very idea of government will be marred by questions. What India witnessed on the Republic Day in the capital was nothing short of a collective shame. Republic thrives when every ulterior motives and selfishness is kept aside to keep the spirit of our republic alive. The case with farm laws has drawn opinions from all circles. A dispassionate analysis shows us that there are some very thought-provoking and sincere points being raised in both defence and counter of the bills. There has been much outrage over the pre-legislative consultation over these bills. A bitter truth is that not all people indulged in day to day economic activity knows much about economics and policy. A handful of people decide for a billion-plus population. I am not sure how many people actually knew the far-fetching importance of reforms that started in the 1980s. Some eminent economists and bureaucrats(example- Montek Singh Ahluwalia) lead India towards the idea of ‘Liberalisation’. Without a doubt, we are all witnessing and enjoying the fruits of it. From about 300$ per capita in 1991 we are somewhere around 2000$ now. The jump has been phenomenal and needs to be appreciated. Having said so, even in 1991, the agriculture sector was left untouched. The process of reforming agriculture took a hit and never recovered. In the last 2 decades, there have been so many committees, all pointing in one direction- We need to amend or do away with APMC act. Yet we have a group of people who don’t feel this way. They seem to suggest that the government has not taken any cognizance of farmers interest and has rushed through the bills. This is an endless loop which I would not like to get into. For the reader's convenience, I would attach a link for the same-
An intellectual biography of India's new farm laws | ORF
A comprehensive guide to the history of India's agriculture policy in the context of the recently enacted Farm Laws. he…
Moving ahead, I feel we are at crossroads which we have avoided for long. There are broadly 2 kinds of farmers:
- One who has benefitted immensely from the MSP. They are mostly located in Haryana, Punjab and parts of western UP/Rajasthan.
- Second are the marginal farmers of Bihar, Bengal, UP and almost all states who have not benefitted from MSP.
I don't think anyone will deny this broad classification of farmers. Of course, there are other farmers who don’t come under the purview of MSP at all. MSP is just on few crops. Like most Dalhan and Tilhan crops have no MSP associated with it. Even fruits and vegetables are not sold at MSP. Coming back to our 2 categories i.e one who benefitted and others who did not. The fractured market for the MSP crops has done some serious damage to the marginal farmers. The variation in prices in Punjab and Bihar is really worrisome. Partly the new farm bills address this concern. I am attaching a link for more data on this-
What India's farm reforms aim to change, in three charts
The same week, reports emerged that farmers from Uttar Pradesh wanting to sell their produce in Karnal, Haryana, were…
I will not go on listing the economic pros and cons of this bill. Enough of material can be found easily on one simple search. My primary concern lies around the functioning of Indian politics and democracy. I will touch upon some key areas of economics as well. Why and How can we go through some big bang reforms? Will the politics of the day allow us any reform in primary or secondary sectors?
In a recent interview, Ruchir Sharma, head of EMs, Morgan Stanley Investment Management said that- ‘We are forgetting what life was like under socialism. Young generations romanticize the idea of socialism, partly because capitalism in the way they know it hasn’t delivered in the past 20 years. Therefore, it is more difficult to build up a consensus to carry out traditional economic reforms.’ Is this at the heart of protest? No, I think there is much more than our obvious romanticization of socialism. In fact, the issue of farm bills has a lot to do with politics. While most of the people welcomed the end of the license raj, we are seeing the contrary argument when it comes to farm laws. One needed connection to open even a small business and therefore the power of power corridors was much more than what it is now. No government wanted to let go of this power. Only people like Rajiv Bajaj were getting benefits and there was no concept of first-generation entrepreneurship. Almost 75% of businesses were family-based and no fresh businesses could come in because of the need for a license which was only through power corridors(money, corruption and whatnot)of Lutyens Delhi. Ruchir Sharma is right when he says that we are not aware of how that time used to be. We are living in times when 70% of our top businesses are first-generation entrepreneurs coming from the normal middle or lower class background. But rewind a little and observe that now we are actually batting for a perpetual license raj when it comes to the agriculture sector. We don’t want to get rid of governments intervention. In fact we want more of it. Ironical isn’t it?
The collusion between state, middlemen and rich farmers(who are mostly situated in Punjab, Haryana) is very strong and therefore no central/state governments want to get into reforming it. Its sad but true politics. Farmers depending completely on the state makes them a pawn in the hands of politicians. Every year on year, giving two hoots to world market needs, politician announces more MSP to cater to their vote bank and vote bank follows. This vicious cycle has been operating for years. Governance must liberate people but here we see the opposite. Governance is making people more and more dependent and the saddest part is that people are liking this normal. Repeated habits become character. This is now the basic character of those farmers. Some people talking about Gandhi while protesting at Delhi borders must understand that Gandhi always stood for liberation. He would never support dependability on any state. This was his fundamental thought. Gandhi would think about the marginal farmers of Bihar, UP, Bengal etc who are not even owning half an acre of land. How will they reach the mandis of state? Who pays for it? How will they survive in this perpetual license raj? Money to middlemen is a basic requirement to sell your produce in mandis. How will a marginal farmer afford that? Gandhi would come down heavily on this system which is most unethical and immoral. Need for state indulgence must only come as the third party when something alarming happens. But to offer a vote bank and become a vote bank will only result in lowering our potential. The fact that state mandis will be operational and yet they are afraid of private mandis exposes their own efficiency. If at all you are running the best system then why fear away from the competition? This lacks moral and economic justification. The welfare of farmers and not middlemen must be the priority and it would be great if a state invests in mandis and make it more efficient. The private players will naturally feel the heat and will be forced to offer a good price to farmers. Farmers will win. Only 2 kinds of forces will lose — Increase in efficiency will drive away middlemen(Imagine getting phone recharged through middlemen :P Laughable isn’t it? But our farmers are still dependent on them for selling the produce). And secondly, farmers being treated as vote bank dependent only on the state will reduce to some degrees as well. This will not only favour farmers of any single state but help India become competitive and ride the tide of the world market as well.
Having said so, some cushion should also be given to the farmers by strengthening the insurance schemes. Other such measures to reduce the risk must also be thought of. Farmers on the other hand must think out of the box and try less water-intensive and market-friendly crop. Afterall wheat cannot replace water. We need to act as an aware and mature society.
In the end, I will only say that democracy survives when both sides bend a little. Breaking barricades won't help, Bending will. Farmer unions must sit down for a year and a half to draw down the lines of reform. This will be a welcome step. If not done so, governments will come and create vote bank, win elections and then go back. Apettite for reforms will be lost in democracy if only winning election matters. We need to congratulate the central government for bending and also showing will to reform rather than just being an election-winning machine. Upsetting a vote bank as large as the farming community is a risk which no one dared to take even in 1991 nor afterwards.
I will end with one of my favourite author's line on voting and vote bank-
“If voting made any difference they wouldn’t let us do it.”
― Mark Twain
Its reform that matters not winning elections. Let's give this a chance. Let's give democracy a chance.