Withdrawal of agricultural laws is a missed opportunity for the progressive
Agriculture in the second most populous country suffers from several weaknesses: unlike the Japanese rulers of Taiwan in the first half of the 20th century, Britain’s colonial government in India did not secure tenant rights, thwarting post-independence land reforms. Gave. holdings are fragmented and uneconomic; Crop diversification beyond rice and wheat is poor; Subsidies abound but public investment is negligible.
With the rise of high-yielding seeds in the 1960s, farming in India needs a fresh start to increase productivity. As long as 43% of the workforce is stuck in agriculture to earn a living, the labor that fuels industrialization will not be freed. Domestic capital that fuels urban growth cannot be built into a subsistence economy, where farming earns the average farmer an average of Rs 27 ($0.36) a day.
The question is, what will boost this productivity – the market or the organization?
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Team Modi believed that opening up markets – allowing farmers to sell produce outside designated “mandi” yards – was the answer. Farmers, who set out on a bitter, year-long struggle against Modi’s agricultural laws, thought otherwise: they feared that the yards, unusable, would stop state procurement of food grains at assured prices. Modi’s reforms promised long-term purchase contracts with private buyers. It also raised suspicions of exploitation by large business groups as disputes would not be decided in a civil court but by the authorities.
Skeptical of assurances that the new deal would improve their overall situation, the farmers geared up. In January, India’s Supreme Court stayed the implementation of three agricultural laws, yet the protests did not subside.
Elections are to be held next year in two states, Uttar Pradesh and Punjab, which have been at the fore of the farmers’ movement. With no end in sight to the impasse, Modi lost the will to defend his reforms. The whole package has been unnecessarily scrapped. While the surrender will certainly damage the prime minister’s strong image and frustrate his supporters, it also shows that a more organizational approach to reforms may stand a better chance than blind devotion to the markets.
Reiterating India’s success with Amul, a $5 billion dairy cooperative, can do more for prosperity than tell farmers they can sell to whomever they want. Apart from the government and some big businessmen, who else will buy? One needs to invest in transport, warehousing, processing, distribution – and, as in the case of Amul – brand-building. The collective, with a little help from New Delhi, was able to persuade Nestlé SA to share its chocolate-making techniques in the 1960s, when India did not even have a large market for the sweets. It does now. Policies that help producers’ organizations capture more of the farm-to-fork value chain will mean better prices for farmers.
At the same time, prices would be cheaper for the regular urban working class subject to the shock of food inflation. The jump in edible oil prices this year is a lesson. Traders bringing in Indonesian palm oil and refining it have made a killing, but farmers who can take a price signal to boost supplies of native cold-pressed filtered oils, such as peanut or mustard, are reluctant to increase acreage . They don’t know if policy makers are satisfied with adding 1.4 billion Indians through exotic cooking – or even more bizarrely, if they don’t mind destroying pristine forests with palm plantations in India’s northeast Because a politically connected yoga guru thinks this is an excellent idea.
The choice is between good organizations and bad ones. In the production of sugar from sugarcane, India exports scarce water at low prices. But the powerful cooperatives that control the industry have their own vested interests. Similar is the case in Punjab, where the wealthy “arhatiyas” who derive aggregate output from individual farmers have a major share in the status quo and the commission income from it. This means that Punjab should continue to produce rice, even if the water-scarce crop is the wrong choice for the state. Farmers prepare their fields for wheat by burning paddy stubble, contributing to the toxic winter air of New Delhi, the capital.
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The government would have to strike a new deal that would gradually shift more than $100 billion in annual subsidies for food, farming and rural unemployment to a basic income, empowered farmers’ groups and stronger public infrastructure, such as more efficient, less corrupt markets. Yard is replaced by. , To think that the power of the markets, freed by the Three Laws, would magically solve this complex politico-economy problem, reflects naivety. Modi has made it impossible for better-conceived reforms to get a chance by forcing farmers to embrace his package and then back down.
This would delay the moment that occurred in England in the middle of the 19th country, and 100 years later in East Asia, when the share of farmers in the workforce fell to less than a third, and urban concerns began to trump rural interests. India’s sclerotic agricultural economy sends the desperate, landless poor into cities when it should be the basis of a more secure and sustainable urban proletariat, one that can set aside the rigid customs of rural life – including the pernicious caste system. is involved – and can make society more progressive. This is the ultimate tragedy.
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