Why you should support farm ordinances introduced by the Modi govt: The mother of all reforms

Modi with farmer`
PM Modi

If you belong to my generation, you probably only have childhood memories of how hard it was to get a train reservation in India. If you are younger than that, ask your parents about the delays, the frustrations, the long lines at the ticket window, the black marketers, and the touts. Ask them about the long lines for kerosene, the years spent waiting for a gas connection or a telephone connection. Ask them what it took to fill out an income tax form and how many years before the refund finally arrived. Or what it took to get a passport.

You probably already have the nightmarish 1980s image of a Sarkari office in your mind. You enter and you are mobbed by “agents” asking for bribes. Your life is at their mercy.

But that was a long time ago. We live in a better country now. But what if I told you that (more than) half of the population still lives like that? And that a group of people is straining every muscle to ensure that it stays that way?

If you are in urban India, you probably don’t think very much about farmers. You know that they are always angry about something or the other, usually loans, which politicians will waive every few years. You might be a suave liberal type who wants to impress friends in New York. So you share images of long columns of farmers marching for “justice,” without shoes till their feet are sore and bleeding. You might be a middle-class taxpayer who is mildly annoyed and grumbles often: where is my loan waiver?

But have you wondered: why are farmers always so angry and helpless? Did you know that agriculture employs over 50% of India’s workforce but only contributes 17% of GDP? How did so many Indians become so spectacularly unproductive? Are they lazy?

No, of course not. They are just stuck in the era before reforms in India.

In mid-June, the government brought three ordinances related to farming, which can forever change the agricultural landscape of India. Folks, this is the mother of all reforms.

To understand why, you must first understand the existing system. How do you think farming works in India? A farmer grows crops and then sells them to whoever is buying, right?

Wrong! A farmer cannot just sell anywhere. The villages in every state are divided into clusters of a few hundred villages each. Every such cluster has a single government-approved mandi, officially called an Agricultural Produce Marketing Committee (APMC). To sell their produce, the farmer must take their crop to the APMC in their area, link up with a licensed agent, pay a commission, and conduct the transaction.

So the farmer can’t go anywhere else except the local APMC. They can’t sell through anyone except a licensed agent. And their entire life depends on this. Do I have to tell you the kind of mafia and corruption that would rule these markets?

Here’s what the farm sector ordinance does. It ends the monopoly of the local APMC. Earlier this year, some BJP ruled states such as Madhya Pradesh, Uttar Pradesh and Gujarat had passed laws allowing farmers to sell anywhere inside the state, instead of being stuck with the local APMC. The farm ordinance from the Central government now allows farmers to sell anywhere across India.

How will this be done? The farmers will sign up on a nationwide online platform where they can sell to anyone who registers with a PAN card. There is no commission. Sound better than the tyranny of the “licensed” commission agent at the local APMC?

You bet!

But this is not music to everyone’s ears. Who do you think had decades of a stranglehold over these APMCs? Are they happy? Take a guess…

They are trying to stop this ordinance through fear-mongering. Like so much else in India’s old socialist architecture, these systems exist to “protect” farmers from “exploitation” by private players. Now it is going away. Private players will take over, they say. They are after profits, unlike the government babu who only cares about your welfare. When have private players ever made anything better?

Who talks like this any more? Have they learned nothing from the last 30 years of India’s economic history?

Government licensed markets, government licensed agents, even government-licensed cold storages, all assigned monopoly areas of operation. What is the natural outcome of this? Zero investment, zero innovation, total decay.

Now you know the real reason why farmers are always unhappy. They have been trapped into dependency by government regulation. In the current model, the farming sector is unprofitable and always will be. And farmers are kept alive on a drip of loan waivers, free electricity, free water, and all sorts of stuff designed to keep you surviving, but only barely. Until the free market comes in, nobody can save the Indian farmers.

There are powerful lobbies that don’t want this. Like I told you, who do you think had a stranglehold on these local monopolies in the rural hinterland? And they will try to win our support with the help of suave media lobbies who know how to tap into urban middle-class guilt and weaponize our emotions about farmers. Big corporations are coming, they say.

The crux of the problem is in how we think about farming. We tend to think of farming in a primitive way: sow a seed, cover it with dirt, and wait for it to grow.

This is a bit like reducing the modern garment industry to the image of a solitary weaver sitting at a wooden loom. Or picturing a modern steel plant as a group of blacksmiths sitting together and hammering stuff out. Or for that matter, a hospital as some guy sitting with mortar and pestle, crushing leaves to make medicine. Could the auto industry or the pharma industry survive that way: leaving it all to micro-level entrepreneurs each running a business worth only a few lakhs? Where would they find the business and technical expertise? Is each small farmer supposed to personally learn all cutting edge farming techniques to maximize produce or the business skills to market and expand? Is each small farmer supposed to hire their own team of experts and buy their own sophisticated equipment?

What we don’t realize is that farming is a modern industry. It needs mass production with cutting edge techniques like any other. Farming is a high skill occupation. It needs sophisticated technical knowhow, like that of a doctor. It needs massive capital investment and economies of scale. Yes, the big corporations are coming. There is no need to fear them.

Back in 2014, India lost out on the crucial Land Acquisition Bill due to similar fear-mongering. Due to a paranoid fear of the free market and a media campaign playing on our emotions. Don’t let it happen again. Save our farmers. From socialism.

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