Monday January 18, 2021

Farmer Agitation - January 2021

Author:  Adit Jain, IMA India January 2021

More than meets the eye

Driving through the Delhi-Haryana border during the Christmas break, I discovered what was effectively a thriving township. Tractor trailers had been converted into living quarters; there were hundreds of restaurants and pop-ups; formidable speakers blared Punjabi rap and washing machines powered by diesel generators churned laundry. The area seemed festive and more like a carnival, than an agitation. Farmers from Punjab and Haryana had camped in demonstration against the recent agricultural laws. SUVs with union flags, hurtled up and down the motorway from Punjab to the border and the other way around. Those on the picket lines were taking turns to return home, only to be replaced by new demonstrators.

Negotiations have, as yet, led to no convergence. The unions first contended that the laws, by creating an alternative to the APMC-driven Mandis, were a ruse to eventually discontinue support prices and leave farmers vulnerable to market vagaries. They demanded a legislative guarantee. Although the Government argued that the new laws did not disturb the MSP system, it nevertheless agreed to providing a written assurance. But instead of resolving the deadlock, this spurred the farmers to shift goalposts to entirely different issues – electricity tariffs and stubble burning – which are in no way related to the farm bills. From the government’s point of view, capitulating to union demands beyond a point would appear submissive and lend encouragement to gripes by other constituencies. The fact is, farming is already heavily subsidised in India, much more than most other countries. Farmers enjoy free or cheap electricity and water, large subsidies on seeds and fertilisers, low-cost loans from banks and finally support prices for their output. Moreover, they pay no income tax. The consequences of these policies have been devastating over the years.

For a start, farmers continue to grow wheat and rice in excessive quantities, commodities that are in abundance. The Food Corporation of India, a procurement agency, has a ballooning balance sheet valued at over Rs 2.7 lac crores, with swelling stocks of rotting grain that is no longer fit for consumption. Second, ground water tables in Northern India’s so called grain belt have been falling rapidly due to inappropriate cropping practices. Scientists estimate that by 2035 the area will become a semi-arid desert. Third, the excessive use of cheap fertiliser has destroyed the soil and led to stagnating yields. The ruin is furthered by inadequate crop rotation considered crucial for soil revitalisation. These practices are totally unsustainable and are the result of an outdated policy regime with warped incentives that have ingrained wrong practices over the years.

The farm bills attempted to solve at least some of these challenges. They were the result of many years of policy debate and were long overdue. Perhaps the government’s approach might have been more consultative but, in the final count, it seems irrational to demand the withdrawal of what is fundamentally a step in the right direction. The new laws will only benefit farmers and the attempt to keep the agitation running suggests a motivation to protect the interest of an entrenched minority rather than that of the average farmer.

A growing worry for the intelligence services is the overseas funding towards the agitation and the consequent risk of things going out of hand and on a completely different track. This would create a new set of headaches for the government. Punjab politicians that encouraged the agitation now silently realise their folly.