The upside of farm laws repeal

The dominant view is dire on the impact of the proposed roll back of the three Farm Laws, enacted in haste in 2020, even as the pandemic raged. Opinion is divided whether it is proof of the government’s shallow commitment to deep reform or that it proclaims doom for agriculture, which has committed Hara-kiri by shunning reforms? Whichever the case, relief is widespread, that the government has allowed the popular will to prevail, howsoever misguided it might be, like in Brexit.

Both are partial perspectives. Here is why.

Modi rules

First, the principle of TINA (there is no alternative) still rules nationally, made even more attractive by the “human-face,” displayed by the government. On the downside the bold decisiveness of the Prime Minister, earlier taken for granted, will have to be reestablished through future events.

Given the fragmented nature of our polity, the frailties of our first-past-the-post system of elections and the sheer numbers of our population, keeping the voter paramount is wise. If Jats (a dominant farming community) coalesce across Western Uttar Pradesh- a state no ruling party can afford to lose- Haryana and Rajasthan, backing down makes good political sense.

That “the popular vote” matters, even to Modi is an upside

One upside is that the popular vote still matters. That is a relief. The vote has never been more than a quinquennial bet on which party is going to benefit the voter the most – personally or ideologically- and that too in the most generic sense. Election manifestos matter only in the context of past actions not future promises. Nevertheless, universal suffrage is an unassailable component of good governance. It becomes redundant if executive decisions do not reflect popular will. That the BJP values popular will and a victory at the polls, augurs well for our Parliamentary polity.

Universal vote and regular elections – albeit not as meaningful as in older democracies, remain significant for reasons other than being “hallmarks of a democratic State. In a political economy where merit is not the uppermost criterion for success, the popular vote stands tall as the standard bearer of merit.

Each member of the Parliament, on average, represents more than a million polled votes and are selected by voters on their “report cards.”  No competing forum, including the renowned Union Public Service Commission system- for selecting civil servants annually- can match the mix of competition, expression of free will and selection parameters for competence on the job. From this perspective, backing down from an unpopular law is a legitimate exercise in political sagacity.

India and farmers have a symbiotic relationship

Nor have the farmers, opposing the bill, committed Hara-kiri. Agriculture is not a “sunrise” sector anywhere. A one percentage point increase in annual agricultural output is a mammoth 25 to 33 percent increase. But it moves the national GDP growth needle very marginally.

To be sure, from the public benefits perspective, agriculture must become less carbon and water intensive by enhancing productivity- and the Farm Laws would have helped. But it is not the case that significant private benefits would have accrued from the farm laws to farmers uniformly across all the sets of potential “losers.”

The existing system for the marketing of agricultural produce and the linked system of public purchase of farm produce at a minimum support price, benefits only a fraction of the large farmers directly. Marginal farmers, who constitute 80 percent of farm holdings, barely have any surplus to sell. They work as agricultural labor or migrant urban workers to supplement incomes.

The absent constituency for Farm Reform

But there was little reason for marginal farmers to see “benefits” from the farm reforms. There was never an explicit plan to benefit them, beyond leasing out their landholdings to corporates. On the downside, It was clear, that farming elites- to whom they are beholden for jobs (increasingly scarce during the Pandemic), emergency help and patronage networks, would lose from reforms with gains experienced elsewhere by traders and exporters. If patrons lose so do the proteges.

As for doing business with corporates, even well-endowed corporates worry about the dilatory quality of judicial review and access to justice for enforcing contracts. Marginal farmers as potential lessors were understandably unconvinced about the practicality of the promise.

Sadly, the executive part of the governance apparatus is so devalued, in terms of its ability to deliver timely justice, that the farmers preferred to subject themselves to the dilatory judicial process rather than to quick redress via the executive – the District Magistrate and his lower-level functionaries. The result was an absent constituency, in marginal farmers, for farm reforms.

Agriculture, a minnow amongst much needed, economy-wide, deep reform

More importantly, from the equity perspective, it is not just the agricultural elite who are unjustly benefited. Urban elite benefit from low charges for utility services and easily accessed education and health services, low cost, public-sector insurance services and low property taxes. Industrial elites – again less than 20 percent – benefit from the myriad facilities to facilitate business – high import tax to protect domestic manufacturing, investment related tax exemptions, competitive corporate tax rates, low interest rates, access to plotted land at cheap rates and preferential public procurement for goods manufactured by small and medium industries.

Comprehensive, equitable, micro-economic reform would need to cut through all these subsidies including by rationalizing jobs in the burgeoning general public sector. Government jobs remain much sought after as “economically riskless or permanent” stepping-stones for families transiting from the “aspirational classes” to “middle class” status. Police and security, health services and education are booming sinks for young job seekers, not matched by reductions in sunset public sector areas like the land revenue administration where digitalization and geo-tagging can cut out much of the grunt work or the passé agricultural extension work force.

The trilogy of “Farm Laws” too big to swallow

The block buster structure of the farm reform exaggerated the perceived business and livelihood dislocation, generating uncertainty anxieties, at a time when the pandemic was raging. For example, amendments to the antiquated Essential Commodities Act (part of the reform trilogy) are essential to unleash trade but of little direct value to farmers, who perceived traders as benefiting under the rubric of farm reform. Piecemeal reform could have targeted specific value chains and negotiated better with the real “losers”- the nexus of traders and big farmers.

India a Tortoise, not a Dragon

The biggest upside of the decision to repeal the farm laws is that it trumpets that India must not emulate China in opting for jumbo sized reforms. But who can blame the government for wanting to enhance the “glacial” pace at which India changes, especially in an age, when even glacial melt has quickened? We, the “comfortably-off” minority, are beneficiaries of this “settled” way of life, sans gut wrenching revolutions or civic violence. The rest have religion for solace.

Also available at TOI Blogs November 24, 2021

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