Rollback is Not the Answer

Context: New Farm laws are only way to push agriculture out of low-income trap.

Problems associated with Indian Agriculture

• Low Income and Small landholdings: especially for small and marginal farmers (who represent 86.21 % of total farmers). Their monthly income is approximately Rs 6,000.
• No scope for increasing Area under cultivation: As 51 % of India’s area is already under cultivation.
• Low contribution to Gross Domestic Product: around 17 %; due to reduced productivity.
• Presence of intermediaries: determining the market price.
• Price variation in production and consumption centres: While the Agricultural production centres have over-produce and low prices, shortages and high prices rule the roost at consumption centres. 
• Lack of storage facilities: About 16 % of fruits and vegetables and 10 % of oilseeds, pulses and cereals perish before reaching the consumer’s table.
  • This results in poor ranking of India (100th out of 118 countries in 2018) in Global Hunger Index (GHI) of International Food Policy Research Institute.
• Exploitation of groundwater resources: Withdrawal of groundwater is more than China’s and the United States’ put together.
  • 15th Finance Commission had observed power subsidies as the major reason for this exploitation.
• Rice-wheat centric production system: due to Minimum Support Price (MSP), seed, fertiliser subsidies.

Significance of the new farm laws in reforming agriculture sector

• Farmers (Empowerment and Protection) Agreement On Price Assurance and Farm Services Act, 2020
  • Promotes contract farming: to encourage private participation and investment (e.g. through technology infusion)
  • Provides protection against acquisition of farmer’s land and dispute redressal mechanism.
• Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
  • It helps farmers to get right price: by empowering them to sell their produce anywhere and thus liberates them from middleman.
  • It provides time limit for payments and includes a dispute redressal system.
• Essential Commodities (Amendment) Act, 2020 
  • More freedom for selling: as regulation is only under extraordinary circumstances.
  • Prevent black marketeers to take advantage of early law.