Opinion: Reboot farms with structural reforms

By Prof Devi Prasad Juvvadi India liberalised its economy and opened up its markets in 1991 but the agricultural sector remained a deterrent as it was largely unorganised and at the same time protected and insulated. Thus in the years post-liberalisation, it became apparent that while industry and services prospered under the reformed system, agriculture […]

By Prof Devi Prasad Juvvadi

India liberalised its economy and opened up its markets in 1991 but the agricultural sector remained a deterrent as it was largely unorganised and at the same time protected and insulated. Thus in the years post-liberalisation, it became apparent that while industry and services prospered under the reformed system, agriculture lagged and remained disconnected from the beneficial effects of globalisation in the absence of a high growth trajectory.

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However, as nearly 50% of the population still depends on agriculture, the reforms and growth in the economy should have begun with the farm sector. Not surprisingly, the disparity in agricultural and non-agricultural income has been increasing with a steep rise in farming costs. This has led to an agrarian crisis.

The so-called structural reforms such as farm loan waivers and subsidies may have given temporary relief but failed to benefit farmers and need a serious rethinking. While there has been a clear demand for agricultural reforms for a long while, cutting across political party lines, the challenge partly emanated from the fact that agriculture was a State subject and not a Central one.

Access and Equity

Two years ago, the government announced provisions for making the country ‘Atmanirbhar’ or self-reliant with structural reforms to revive the economy. Agriculture reforms without structural rethink create the problem of access and equity for farmers, particularly small and marginal.

Generally, democratically elected governments with a limited term of office do not want to risk negative popularity in the short term for potential benefit in the future, for which they might not be able to take credit. Yet, while providing relief in times of distress, the government introduced reforms through farm Bills in 2020 that was nothing short of historic and revolutionary.

The Acts, which may have proved quite useful if implemented but created distrust about the intent of the government, were withdrawn amid agitation by farmers. They were not well received by farmers as they were not formulated with wide consultation of stakeholders.

But the sudden decision to repeal the three farm laws should not be seen as the end of the road for agricultural reforms. We need to learn that for undertaking reforms in agriculture, consultations must be inclusive and wider, aimed at protecting farm incomes and food security, keeping in mind the challenges, including the ones which have resulted from the current set of policies.

No One Size

Agriculture in India is unique, not only in terms of natural topography and climate but also in the landscape of land distribution with the majority being small holdings of less than one hectare. The country is diverse with several agro-climatic zones and the trickiest is that agriculture is a State subject. That makes the process of agricultural reforms complex and it cannot be hammered through by just a central legislation simply because one size does not fit all the States.

The reforms and policies need to be led by the States as per their requirements but also need to be designed pragmatically and structured cohesively with the federal spirit of the country. They should ensure the convergence between aspirations and requirements of the States and long-term needs of the country related to the aspects of food security, public distribution system, exports-imports, climate impact, etc.
Despite the complex challenges, it is paramount that agriculture needs a major overhaul to increase farm incomes with improvements in productivity, storage and distribution, global exports while addressing soil, water and climate problems. The year 2022 will be crucial for agriculture because after repealing farm laws, the government’s approach on agriculture reforms and the issue of a legal guarantee of minimum support price will be tested.

MSP Issue

The government has announced setting up a committee of experts to delve into contentious issues, particularly the future of minimum support price. Eminent experts and farmer’s representatives from across the country should be nominated to the panel with a mandate to “ensure how all farmers can get MSP”. In any case, the committee report must be made available before the end of 2022, so a decision on the issue will have to be taken in 2023, just a year before the parliamentary elections that are due in April-May 2024.

It is time to reboot agriculture with systematic reforms in consultation and engagement of stakeholders to make it more successful in realising the dream of doubling farmers’ income at the earliest. The union government should not allow the momentum for agriculture reforms to wane. The momentum and discussion should continue, and a consensus should be reached on structural reforms with clarification of responsibilities between the Centre and the States.

Also, further discussion on agricultural improvements should be on rebuilding trust between the farming community and the State-Central governments. The reform initiatives should consider the prevailing natural resources, climate, water supply, productivity, and socio-economic conditions in the States. At a time when weather variabilities have become quite common in the wake of climate change, government interventions to assuage farmers from price volatility, apart from climate risks, must be at the forefront of structural reforms.

(The author is Director, Centre for Good Governance, Hyderabad)