From plate to plough: Coverage choices to take care of the farmer protests

The agitation is primarily led by Punjab farmers, though another teams have additionally joined.

Farmers Are protesting towards the lately enacted farm legal guidelines by laying siege to Delhi’s highways connecting the nationwide capital to neighbouring states. The agitation is primarily led by Punjab farmers, though another teams have additionally joined. I consider each citizen has the fitting to protest peacefully. However, blocking highways reveals their intention is to create chaos and disruption, which can exit of hand.

Right here, let me additionally say that I really feel there’s a gross communication failure on the a part of the Centre, on explaining to farmers what these legal guidelines are and the way they’re supposed to learn them. This communication hole was totally exploited by some political events and social activists, who’re dealing with an existential risk and consider that the Modi authorities can do no good to this nation. An enormous misinformation marketing campaign was launched saying that these legal guidelines are a sell-out to company homes, will abolish the MSP system, dismantle APMC mandis, and even seize farmers’ lands. Nothing might be farther from the reality. Neither do the legal guidelines say something concerning the MSP system neither is the MSP/APMC system going to vanish with these legal guidelines. Sure, what would come beneath strain is the excessive commissions of arthiyas, mandi charges and cess that states acquire, which account for as a lot as 8.5% over MSP in Punjab, amounting to Rs 4,500-5,000 crore annually. A considerable chunk of that is by no means audited by the Comptroller and Auditor Common (CAG) of India. No surprise some scent a rat within the farmers’ protests.

In any case, what are the coverage choices now that farmers have dug of their heels? Punjab farmer-leaders, together with two main political events, are demanding the repeal of those legal guidelines. I don’t assume that may be within the bigger curiosity of the nation’s peasantry, as repealing would imply bringing again controls, licence raj, and ensuing rent-seeking. Bear in mind milk, poultry, fishery, and many others, don’t undergo the mandi system, and their progress charges are 3-5 instances increased than that of wheat and rice. Total, virtually 90% of agri-produce is offered to the non-public sector.

One other demand is to make the MSP legally- binding, even on the non-public sector—implying that anybody shopping for beneath MSP might face jail. Let me say that this isn’t the primary time such a requirement has been raised. It got here up a number of instances even in the course of the UPA period (2004-13), and each time, it was rejected. I contemplate this impractical as there are 23 commodities for which MSPs are introduced, however in observe, solely wheat and rice get pleasure from MSP-enforcement in any significant method, and that too solely in six-seven states. Punjab is the most important gainer as 95-98% of market arrivals of wheat and paddy are procured at MSP by state companies on behalf of Meals Company of India (FCI). FCI is overloaded with grain shares, at over 2.5 instances the buffer inventory norms, indicating huge financial inefficiency within the grain administration system with a value of 1000’s of crores of rupees to the taxpayer with out serving any goal. That too at a time when the nation desperately wants funds to deal with Covid-19 at house and the Chinese language at its borders. I contemplate this coverage choice impractical as a result of even when the federal government can not cope up with extra manufacturing of simply wheat and rice in any significant means, consider the way it will deal with 23 commodities for which MSP is prescribed. Within the case of extra manufacturing, the non-public sector is not going to come ahead to purchase at MSP, and the federal government is not going to have the wherewithal to purchase all of the inventory and retailer this with none viable outlet. It would massively distort the markets, make Indian agriculture non-competitive, and stocking of those will probably be financially unsustainable. And, why solely 23 commodities, why not say 40? The sort of socialism is a certain path to monetary catastrophe.

The third coverage choice is to make use of the Value Stabilisation Scheme to offer a raise to market costs by proactively shopping for part of the excess each time market costs crash, say greater than 20% beneath MSP. It may be performed straight, by way of NAFED and different such companies already energetic in case of pulses and oilseeds, or through the use of Commodity Derivate Exchanges the place farmers should purchase ‘put choices’ at MSP earlier than they even sow their crops, and if the market costs on the time of harvest grow to be beneath MSP, the federal government can compensate them partly for the decrease market costs. I contemplate it a possible choice, and this may be kicked off instantly.

The fourth choice is to completely decentralise MSP, procurement, stocking, and the general public distribution system (PDS). Since many states and activists are saying that agricultural advertising is a state topic and, by way of these legal guidelines, the Centre is trampling over their jurisdiction, then why also have a central MSP? Since MSP and procurement exist mainly to help farmers for supplying grains to FCI to feed into PDS, the cash for the so-called meals subsidy needs to be allotted to states on the premise of their share within the nation’s poverty/economically weak inhabitants, its wheat and rice manufacturing, its procurement of wheat and rice, and many others. A effectively thought out formulation must be labored to allocate, say, Rs 100,000 crore of meals subsidy. And, then let states determine what needs to be the state MSP and allow them to deal with procurement and stocking prices. The deficit-states can invite tenders for supplying these in required portions or, even higher, they could introduce money transfers within the PDS system. I might go a step additional and embrace one other `100,000 crore of fertiliser subsidy and release fertiliser costs from controls. And, past that, even embrace one other Rs 100,000 crore, say, of MGNREGA. Let Finance Fee work out a formulation for distribution of this Rs 300,000 crore amongst states based mostly on some tangible efficiency indicators. And, the Centre ought to shed its MSP, PDS, fertiliser subsidy, and MGNREGA tasks. This may be true decentralisation and might be achieved, supplied sufficient groundwork is finished upfront. Will this be acceptable to farmer-leaders/opposing states/ activists? Solely time will inform.

The creator is Infosys chair professor for agriculture, ICRIER. Views are private

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