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Business News/ Opinion / Columns/  Our farm law deadlock calls for a political solution, not judicial
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Our farm law deadlock calls for a political solution, not judicial

Mere promises won’t end the impasse and the budget must allot funds for farm-sector investment

Farmers sit at the site during their ongoing protest against new farm lawsPremium
Farmers sit at the site during their ongoing protest against new farm laws

The interim order of the Supreme Court on the ongoing agitation by farmers against the enactment of three farm laws is unlikely to change anything on the ground. The intervention, which came without the arguments of protesting farmers being heard or of state governments on the constitutionality of the laws, may have given the Union government an escape route for some time. But it is unlikely to be accepted by the agitating farmers. Their unions have already rejected the committee appointed by the court to discuss the matter with them. Apart from a political bias among its members in favour of the laws’ enactment, the issue is also of what the agenda for any further discussions would be. There have been seven round of talks between agitating farmers and senior ministers of the government on each and every aspect of the changes that the farm laws are likely to bring. It is unlikely that there will be any new common ground that the committee can find.

The reason why these talks are unlikely to be of any help is that the issues that have led to the stalemate between the government and farmers have much less to do with academic arguments on the benefits and losses owing to the enactment of these farm laws, and more to do with the trust between the two sides. Over the last month-and-a-half, most of the issues, including facts, figures and arguments from both sides, have already been articulated through the media. However, farmer unions are unlikely to be convinced by lofty promises when the ground reality suggests a worsening of the economic situation in the country’s rural areas.

Data on daily casual wages up to September shows a decline in nominal terms for many occupations, compared to July. A better indicator of agricultural income is the trend in output prices, particularly of food items. The data on wholesale prices, which are indicative of farm gate prices, shows a decline in prices of most agricultural items compared to last year. This is true even for wheat, which has seen massive procurement by the government.

The latest data in this series is of retail price inflation, which was released earlier this week. While overall food inflation has come down sharply from more than 9% in November to 3.4% in December, cereal inflation is now less than 1% on an year-on-year basis, mirroring their decline in wholesale prices. But the sharpest decline was seen in fruits and vegetables, with vegetable price inflation in December at -10.4%. Not only do these data points debunk government claims of a rural revival, they point to a worsening of rural distress. Vegetables are not protected by any procurement operation and only some are traded at Agricultural Produce Marketing Committee (APMC) mandis. What should also worry the government is that inflation in the eggs and meat group, which saw high 16% inflation last month, is likely to witness a decline due to the bird flu scare in several states. At the same time, input prices continue to rise, with those of diesel hitting an all-time high.

It is this double whammy of declining output prices and rising input prices that is hurting farmers. With the government having more or less abdicated its responsibility of increasing infrastructure investment or strengthening market infrastructure and regulations, or offering price support for a majority of Indian crops, the burden of driving growth shifts largely to the private sector. But the private sector can do little to lift prices and raise incomes at a time when the broader economy itself is undergoing a demand crisis.

The issue is not just of minimum support prices, APMC mandis and private markets, but a larger political economy: one of state support to the rural economy in general and agriculture in particular. India’s economic slowdown goes back two years, much before the covid pandemic struck. The outbreak has only worsened its condition.

Therefore, any attempt to divert attention from the core issues through judicial means is unlikely to help the cause of bridging the trust deficit between the government and agitating farmers. What’s needed is a proactive policy of raising rural demand through fiscal spending and protecting the rural economy from further distress. It will not only help build trust, but also aid in the revival of India’s economy. Further, it will show the sincerity and commitment of the government to investing in agriculture, and create a better overall environment for the initiation of market reforms. Budget 2021 presents the government one such opportunity.

Himanshu is associate professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi

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Updated: 14 Jan 2021, 10:38 PM IST
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