Given how India seems to revere its farmers (annadata), the preferred narrative about the present Punjab farm agitation is that the Narendra Modi government passed the farm laws in a hurry, and devoid of any true discussion, so it is not surprising ‘poor’ farmers – who helped make India self-adequate in foodgrains – are up in arms in the capital. If the agitating farmers think MSP-primarily based procurement will be abolished, it is for the reason that, the argument goes, the haughty Modi government never ever truly engaged with them just clarify the information to the farmers and, the belief is, they will quietly go residence.
While a bigger discussion on something is a very good thought, does any person truly think any reforms can effortlessly be passed when a celebration does not have a majority in each homes of Parliament. As an aside, did Dr Manmohan Singh very first talk about his 1991 reforms threadbare or did he just announce them? It is also worth maintaining in thoughts APMC reforms have been discussed for decades. Indeed, the very first profitable try at APMC reform, to let farmers to sell fruits and vegetables in non-APMC mandis in numerous Congress-ruled states, was completed in 2013, when Dr Singh was the prime minister in a UPA regime the causes for this had been the identical as now, to give farmers a lot more selection in whom they sold to and exactly where. Nor is it clear that if the Modi government laws are so anti-farmer, why haven’t these from other states joined the agitation.
More essential, even though some journalists such as this 1 and a number of economists have been campaigning for abolishing MSP-primarily based procurement as it is unfairly tilted towards a couple of states like Punjab (see graphic), the Modi government has not completed this. If, in spite of this, the impression is becoming spread that MSP is to be abolished, this is clearly mischievous. But why not, the seemingly affordable counter is, place an limitless (?) MSP-primarily based procurement clause in the law that way, farmers will be reassured.
Since an limitless MSP-primarily based procurement is not in the law even these days, it is not clear how this is even an situation these days. More essential, placing this in the law signifies India will get tied to distortions that MSP-primarily based costs trigger in perpetuity. Assuming the government – even 1 led by Dr Manmohan Singh or Rahul Gandhi in the future – agrees to this, why really should this be restricted to just wheat and rice that Punjab grows? Extending this to all crops, on the other hand, is entirely unaffordable. So, if the price range is a constraint, ideally what ever the FCI-commit is on limitless procurement these days really should be divided equally amongst all states, either primarily based on their population or output no matter what metric you use, Punjab is hopelessly pampered. If the Modi government is content material to let Punjab stay pampered, it is its very good fortune that other states like Uttar Pradesh (UP) or West Bengal are not agitating against this.
About 70% of Punjab’s wheat output is procured by government agencies and this is about 85% for rice after you aspect in how substantially of the crop is consumed by farmers, pretty much all the marketable surplus is procured at MSP. Contrast this with the reality that just about 10% for UP’s wheat is procured at MSP – UP produces double the wheat Punjab does – and this is about 24% for rice. So, whilst mandi costs are usually 20-50% beneath the MSP for most crops, the Punjab – and Haryana – farmer is pretty much absolutely insulated from any market place-threat.
A associated point worth maintaining in thoughts is that even with the MSP-primarily based procurement intact, this will not truly assist Punjab considering the fact that development in the state’s agri-GDP is swiftly slowing. Agri-GDP grew by 5.7% a year in 1971-72 to 1985-86 versus India’s 2.3% each Punjab and India grew at roughly the identical 2.9-3% in 1986-87 to 2004-05, but in the period considering the fact that then Punjab’s agri-GDP grew at just 1.9% versus India’s 3.5%. The purpose for this is that whilst MSP for wheat and rice can rise just so substantially provided worldwide costs – our MSPs are currently larger than worldwide costs – as effectively as the effect on the central price range, other crops and livestock are yielding considerably larger returns the after adventurous Punjab farmer, on the other hand, has mainly remained stuck with wheat and rice and is paying the cost.
And whilst it is essential to acknowledge Punjab and Haryana’s part in supplying India meals safety for the duration of the green revolution days, substantial government expenditure in developing a road and irrigation network – Punjab has amongst the finest road and irrigation networks in the nation – played an equally massive part as this decreased each market place- and output-dangers. Even these days, with fertilizer and electrical energy subsidies (this is borne by the state) at more than Rs 13,000 crore a year, every farming household in the state gets Rs 120,000 of sops apart from what FCI spends on getting wheat and rice far in excess of what it desires or the interest subvention by the central government or even the true expense of the water made use of for farming.
A associated situation is that of the harm to Punjab’s soil due to it expanding water-guzzling crops most of the land in the state is ‘over-exploited’ and overuse of urea has also lowered the fertility of the soil. Were the identical type of dollars – in particular the assured offtake by FCI or other procurement agencies – spent in states like Uttar Pradesh, Bihar and West Bengal, not only would this transform their economies, it would also decrease India’s water consumption considering the fact that some of these states also need a lot much less water for surface irrigation for the identical crop.
The higher-pitched agitation in Delhi is not just primarily based on incorrect perceptions of what the new farm laws will outcome in – the abolition of APMC mandis and MSP-primarily based procurement – they are also not about guarding the Punjab farmer considering the fact that it is clear the status quo is accountable for the fall in Punjab in the country’s agriculture GDP rankings. The agitation is purely an try to corner the Modi government, to enhance the sagging fortunes of the Congress celebration by deliberately misleading farmers. That is why, prior to Captain Amarinder Singh decided to fuel the agitation, he made use of to be batting for improved diversification to non-MSP crops/livestock in the state.