Why Big Business Want These Farm Laws

Context: India’s big businesses are turning towards the agricultural sector (by supporting farm laws) after exhausting all other options of making mega-profits.

Arguments in favour of big corporates in Indian farming

• Investments: Big companies will bring low-cost finance, will be able to procure seeds, fertilisers and pesticides at discounted prices because they’ll order it in bulk,
• Improved productivity: through new farming technologies to improve yields and will reduce wastage at harvest, setting up cold-chain systems.
• Huge comparative profits: They will sell the produce at lower prices to the final consumer, in their own retail chains, by removing the villainous middlemen.
• Urban consumers are not affected: They already pay for margins earned by the entire chain of intermediaries who stand between the farm and their kitchen.

Reasons why big corporates want to enter Indian agriculture sector: Economic changes across the history of India have encouraged corporates to enter agriculture sector:

• Before the 1960s: India has always had monopolies, where few business houses controlled all organised industries (Someone of the airs of being rich was ridiculed as Tata-Birla!)
• After the 1960s: Indira Gandhi turned socialist and put restrictions.
• After the mid-1980s: Restrictions were removed (during Rajiv Gandhi era).
• After 1991 reforms: The liberalisation era provided an opportunity for new entrepreneurs, especially for export-oriented industries and sunrise sectors like telecom and IT.
• In 2008: Credit fuelled business collapsed after the global financial bubble burst and many firms went bankrupt.
  • Some sectors, such as power, were entirely abandoned, leaving it to the government and public sector banks to deal with the mess created by private capital.
• After 2014: Failed consolidation plans due to rising bad loans, slowing down of economy and unemployment (mother of all demand problems) forced corporates to cut their costs.
  • Big companies are spending their profits on buying back shares and rewarding shareholders with bigger dividends. This can lead to a vicious cycle leading only to increased contraction.