Reform, the Indianway + Listen to the less powerful

Context: While pushing reforms in a democracy can be complicated, unlike in a country like China, dismissals of citizens (farmers and workers) concerns reduces the quality of policies and makes them harder to implement.

Reasons for structural reforms slow in a democracy like India

• Nature of democracy: John Stuart Mill defined democracy as “government by discussion”, followed in India through checks and balances, a bicameral structure, and a voice for every citizen.
• Requirement of buy-in of every stakeholder: Thus, reforms will be slower than in the China model.
• Need for multifaceted layers of negotiation and consensus-building:
  • For bringing forth innovation in policies such as the Production-linked Incentive Scheme. 
  • To simultaneous prioritise “lives and livelihoods”, ensure that the allocation of resources is efficient and adequately determined to enable maximum value creation for the society.

Some recent successful reforms in India

• By NITI Aayog: Like the “God’s Own Country” initiative, the Incredible India campaign and Ease of doing business
• Achieving inclusiveness in Production Linked Incentive Scheme: Inclusive processes and institutions enabled us to successfully create consensus towards deciding the scale of incentive.

Arguments in favour of new farm laws: A trinity of legislation to facilitate contract farming, remove price restrictions and boost open trade.

• Based on consultations and recommendations:
  • Committee and Reports:
    • The Expert Committee Report, Ministry of Agriculture in 2001,
    • The Report of the Inter-Ministerial Taskforce on Agricultural Marketing Reforms in 2002,
    • The Model Agriculture Produce Marketing Committee Act of 2003,
    • The National Commission on Farmers between 2004-2006,
    • The NITI Aayog Task Force on Agriculture Development in 2016,
    • Ashok Dalwai’s Doubling Farmers Income Committee Report of 2017,
    • The High Powered Committee of Chief Ministers recently in 2019.
  • Discussions in parliament for passing the bill.
  • Ministers held a dialogue with the farmer representatives.
• Will democratise the opportunity structure: for 43 % of our 500 million-plus, strong workforce engaged in agriculture and the lives of millions will advance towards significant well-being.
• Will realise the views of agricultural experts: Experts like M S Swaminathan and Ashok Gulati wanted to decrease input cost inefficiencies, ensure better price signalling and minimise post-harvest losses.
• Increase productivity in the sector: Due to unleash of the entire value chain of agriculture, entrepreneurs, industry and farmers will collaborate and cooperate for innovations.

Issue with the low incomes of farmers and workers

• Too many people in agriculture: The agriculture sector contributes 17% of India’s GDP, it employs 57% of the workforce.
  • Ideally, agriculture should employ only 17% of the workforce (about 500 million).
  • No jobs in manufacturing act as their migration to the secondary sector.
• Fragile incomes in manufacturing: Along with the problem of low productivity, the introduction of “Industry 4.0” with more technology and automation threatens future jobs.

Problems with the new agriculture and labour reforms

• Agriculture reforms:
  • Have negative implications on small farmers: The terms of trade are stacked, as they always are in unregulated markets, in favour of the large against the small. 
  • Less government intervention may not improve incomes: Farmers have not been able to improve their incomes in those parts of the country where government intervention has been minimal.
    • For E.g. The guaranteed minimum price applies to only a few crops while the Agricultural Produce Market Committee (APMC) infrastructure covers less than 17 % of the market.
    • Quote: Deregulated imperfect markets may become more, not less, imperfect than regulated imperfect markets. - Barbara Harriss-White.
• Labour reforms: Labour reforms diluted the fundamental right of collective representation.
• Stakeholders are not consulted: The government’s dismissal of the concerns of farmers and labours through “bold” reforms is not only bad for democracy; it reduces the quality of policies.
  • It has been observed that the terms of employment are most secure, and wages have risen, in large establishments where unions have been strong.

Way Forward: 3 fundamental reforms -

• Policymakers must listen to the less powerful people in markets.
• Formation of cooperatives of producers and workers: Producers should have more power in negotiations with their buyers, suppliers, and government, increase their own incomes and wealth.
• Realisation of power asymmetry: by market reformers by cleaning up their ideological lenses and see the reality of where power lies in markets.

Conclusion: The concept of democracy should not be reduced to elections and political parties, since Democracy is also a process of listening to all stakeholders.