Rollback is Not the Answer

The Indian Express     23rd January 2021     Save    

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.