Mains Paper 3: Economy
Prelims level: Ease of doing business report
Mains level: Issues Related to Farm Subsidies and MSP
• The Farm Acts that are the focus of the farmers’ protest bear variously on the different strata of the farming community.
• In 2016, PM Narendra Modi spoke of his vision of doubling the income of India’s farmers by 2022.
• Probably, one of the measures that the Union government proposed to sub-serve this end was in the form of the three Farm Bills in September 2020 — by liberalising access to agricultural markets, removing existing barriers to storage of agricultural produce, and facilitating contract-farming.
The probable agenda:
• While these measures have been defended on the basis of slogans such as ‘One Nation, One Market’, they appear to be more directed to scoring brownie points in the ‘Ease of doing business’ index (the present regime has scored impressively well here in the last couple of years).
• Probably, more policy measures were in the offing to sub-serve this objective.
Ease of doing business:
• The Ease of doing Business Report is released by the World Bank.
• It is an analysis of the viability and impact of the government’s economic policies – whether it has promoted and facilitated the ease with which one can conduct business in the country.
• Empirical data is collected from government officials, lawyers, business consultants, accountants, other professionals to contribute to the assessment.
• Parameters considered while preparing the Ease of Doing Business Report –
a. Starting a Business
b. Credit for Business
c. Construction permits
d. Cross-border trade
e. Availability of electricity
g. Property registration
h. Protection of minor Investors
i. Contracts enforcement, and
j. Remedial measures for Insolvency
• Two more parameters, employing workers and contracting with the government have been talked about but have not been considered in the score and rankings.
• A wide spectrum of the political Opposition in Parliament offered strong resistance to these Bills;
• Some State governments even enacted their own Bills that were largely directed against the key provisions of the central farm Acts even though the constitutional status of these enactments is highly dubious.
Concerns attached with the bill:
• Farmers are skeptical of the government claim that these laws would make agriculture more lucrative and secure by allowing market forces to play.
• The fear that the new regime will dismantle the system of procurement under Minimum Support Price (MSP) and leave farmers at the mercy of corporations is real.
Government’s point of view:
• Centre has suggested safeguards to prevent land alienation via contract farming; strengthening the State-run mandi system and ensuring its equal footing with private buyers through equalising taxes; allowing grievance redress in civil courts rather than just in the offices of Sub-Divisional Magistrates; and ensuring proper verification of private traders.
• It has not, however, offered a legal guarantee of MSP and the question of power subsidies also remains contentious.
• Agriculture has to remain environmentally sustainable and remunerative for farmers.
• Sustainable agriculture is farming in sustainable ways, which means meeting society’s present food and textile needs, without compromising the ability for current or future generations to meet their needs. It can be based on an understanding of ecosystem services.
• There are many methods to increase the sustainability of agriculture. When developing agriculture within sustainable food systems, it is important to develop flexible business process and farming practices.
• Agriculture has an enormous environmental footprint, playing a significant role in causing climate change, water scarcity, land degradation, deforestation and other processes; it is simultaneously causing environmental changes and being impacted by these changes.
• Developing sustainable food systems, contributes to the sustainability of the human population. For example, one of the best ways to mitigate climate change is to create sustainable food systems based on sustainable agriculture.
• Sustainable agriculture provides a potential solution to enable agricultural systems to feed a growing population within the changing environmental conditions.
• India has ensured substantial food stock and a robust distribution mechanism that covers the entire country.
• There is a strong case for reworking the incentive structures and cropping pattern in order to account for changes in water availability and changing dietary requirements and make it sustainable overall.
States have a pivotal role:
• The States are the apt agencies to respond to a host of concerns faced by the farming community, which includes agricultural marketing.
• While enacting the Farm Bills, the Centre extended little consideration to the sensitivity of the States, leave alone consultation, although some of them made their opposition to the Farm Bills quite explicit.
• The three Acts that are the focus of the farmers’ agitation, and which farmers have demanded be repealed, bear differently on the different strata of the farming community and in different regions.
APMC as cushion:
• The weakening of the Agricultural Produce Market Committee (APMC) system by subjecting it to competition — and its resultant bearing on Minimum Support Price (MSP), particularly on crops such as rice and wheat — is seen by the farmers as a threat to an assured sale of their produce at a price.
• This system provides a cushion, wherein the farmer can anticipate the cost of opting for these crops and tap the necessary supports through channels he has been familiar with.
• Subjecting this system to the vagaries of a competitive market, including storing and contracting of the produce, where he would eventually be beholden to the large players, including monopolies, are prospects that a farmer detests even though he is aware that the middleman is not a saint.
• There is widespread apprehension that the measures proposed by the Farm Acts in addition to the existing agrarian distress, are only going to make the lot of the farmer even more precarious.
What is APMC?
• Agricultural Produce Market Committees or APMC is the marketing board established by the State governments with the purpose of eliminating farmer exploitation by intermediaries where they have to sell their produce at extremely low prices.
Resentment from the farmers:
• In this context it is important to recall the powerful farmers’ movements that sprouted across India from the 1970s, led by such iconic leaders as M.D. Nanjundaswamy, Sharad Joshi, and Mahendra Singh Tikait, which claimed to speak not merely for farmers but to the rural segment as a whole.
• While in some parts of the country the class and caste divide are still sharp, in other places, farmers’ organisations have not shied away from critically engaging with class, caste and gender concerns, although it has not made a substantial difference to the prevailing configuration of these relations.
• The very fact that a social reality is widely accepted provides space for policy intervention. The Farm Bills have ignored that the rural is a vibrant space in India, with ‘elective affinities’ binding its vast expanse.
The farming strata:
• The rich farmers are affected directly from these farm bills but the distress is shared in common by the different strata within the farming community, even though it has a differential impact on them.
• It is important to bear in mind that the rich farmer has also reinforced his position enormously in the rural over the years after the Green Revolution and farmers’ movements of the 1970s.
• They have also invested their surplus in agri-business and clearly hold access to the wider economic and institutional domains.
• The lower strata of the farming community has little autonomous organisation in much of the country except caste. Therefore, there is little doubt where the lower strata of the farming community would throw in their lot with against the farm bills.
• Discussions: Government – farmer interactions can be structured using a broad and structured framework.
• Additional Mandis: India requires more mandis and further investment in themandi infrastructure. The MSP system must incorporate more regions and crops.
• Universalisation of the Public Distribution System: This will act as an affordable source of food for the poor.
• Better mandis: APMCs need internal reforms for smooth entry of new players and reducing trader collusion. Also, reforms to maintain proper list of the engaged parties in national e-trading platforms should become mandatory.
• National licensing: Introduction of common national licence for traders and a single point of contact for collecting market fees.
Q.1) With reference to the National Science Film Festival, consider the following statements:
1. Vigyan Prasar, an autonomous agency under the Department of Science and Technology, Govt. of India, has been organizing this festival.
2. The festival offers a unique platform to showcase the science films made by professionals, amateur and student filmmakers under various themes.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Q.1) What are the major provisions of the new farm bills? Why there are opposition from farmers?