The farm laws have
been repealed. Government's decision to repeal hints that accusations of
agitators about farm laws are intended to end the MSP regime and hurt the big
farmers might have been true. And there is no surprise. The farm laws were
about easing the fiscal burden government faced due to procurement based on
MSP. If government is not planning to ditch this route, then why it was not
ready to make a law for using it? - The repeal seems to vindicate the doubt.
Government failed
to communicate the potential trajectory of changes the laws could have
generated. One reason why government would have chosen not to reveal it is
because it might have revealed some unpleasant possibilities, like some big
businesses benefiting or section of farmers losing out and large section of
farmers having no gain – no loss from it. But there is another reason why
government chose to not communicate. It did not because it is extremely
paternalistic towards Indians. The approach of Modi government is like a parent
to an adolescent kid: I have your interest at heart and I hold the power to
take decision. I need not explain it to you.
The coterie of
economists, formal and voluntary, that government has at its disposal did not
bring forth roadmap of how the farm laws would work. The absence indicates
either the unclear possibilities or unpleasant possibilities. I think it is
later than former. Government maintained the opacity over future of MSP. Its
reluctance to grant legal status to MSP was seen government’s desire to
manipulate the MSP or even do way with it.
BJP concluded that
such an opacity is better than clearer communication that MSP based procurement
is an institution bound to disappear and it is going to hurt the section of
farmers, but the net gains for the country will be positive. The calculation
shows that urban middle-class India, which would have been the beneficiary of
the reforms, could not be relied upon to cover for electoral damages. That
either because it is already consolidated in support of BJP and there are no
further gains or even fraction of this support base was swayed by the emotional
turbulence invoked by agitation. Notion of farming still has huge emotional
value for most of the urban Indians. The ‘Annadata’ agitating for his demands,
sitting on asphalt in sun and rain was too powerful an image to be erased with
cost-benefit calculation.
It also be noted
that no farmer group rose in support of farm laws. BJP managed some token
expressions of support, but small and marginal farmers, which were highlighted
to be beneficiary of the reforms have not rallied behind reforms. It also be
noted that barring the Delhi borders, no other places saw agitations as well.
What it tells us is the fact that farm laws could not have helped or harmed the
non-agitating farmers.
The fact that
small and marginal farmers have not rallied behind BJP hints at several
possibilities. Simplest of these possibilities is where this class finds
political activism too costly. But considering BJP's ability to organize,
either through themselves or through choosing right regional allies, if there
would have been a farmer group which is going to receive considerable benefits
through reforms, BKP would have brought it forward. If it hasn’t despite there
being one, it is a serious failure.
More likely
possibility, as hinted earlier, is that reforms would have led to loss to
farmers through MSP dismantling. But gains to non-farmers (if prices fall) and
government (fiscal space) would have been more than compensating. It is amusing
to expect that introducing competition can help farmers realize higher prices.
MSP helps all farmers, even those not selling in Mandi, since MSP provides a
basis to market price at which farmers sell. In the absence of such basis,
farmers will have to sell to cartel of intermediaries which is unlikely to lead
to higher prices. The optimistic scenarios of firms competing to procure and in
that attempt reaching to farms bidding higher and higher prices are very likely
to be untrue. If such would have been the case, we would have seen it
happening. When there are gains, hardly anyone stops from realizing them
because they are yet to become legal. There were no gains for farmers – that’s
perhaps the right implication.
As pointed by
Roshan Kishore, retreat shows that BJP can push the socio-political reforms and
if not outright implementation, can achieve the status-quo where reform stays.
(E.g. CAA) But pushing the economic reforms which will have differential gains
for different interest groups is still not the game it can play. The
implication is obvious. BJP is a party of proud guys who nourish every hurt to
become force for future action. The retreat on farm laws will eventually become
a forward push somewhere, very likely to be a frontier where BJP knows the game
better. My pick is NRC.
There is a silver lining to repeal
of farm laws. Covid-19 pandemic induced precautionary national lockdown
revealed the vulnerability of millions of households. Millions of Indian
households encountered food insecurity during this period. MSP based rice-wheat
agriculture results in surplus which provides potential for food provision in
such situation. Repeal of farm laws ensures that MSP system remains in place,
ensuring food security to good extent, while generating it’s inefficiencies.
Unless it is clear how same food insecurity potential can be generated with
market while reducing the inefficiencies, it is a bitter but prudent pill to continue with current
structure.
I had thought that BJP will play
the long game of pushing through farm laws, where the simply wait the agitators
out while generating social media churn of opinions in support of farm laws. I
know that I have lesser grasp of reality than a shrewd political leadership. Hence,
the BJP's unexpected retreat has puzzled me. One answer to puzzle is BJP by
retreating now has provided itself a space to act accordingly to its choice in
remaining 2 years before the next general election. There is no reason to
assume BJP will be defensive on other fronts as well, even against the
emboldened opposition. In fact, it is very unlikely that spirit of farmer
agitation transforms into wider phenomenon. The rural elite group that fueled
the agitation will go back to milking the mummeries of welfare state, as they
have been doing since green revolution. BJP, wiser by their debacle, will focus
on its core : Hindu primacy through democratic majority apparatus.
There is an alternative
possibility. Government sounds the field, tell the unpleasant truth,
acknowledges the losses even if they are of relatively better off and provides
them a medium term compensation mechanism and reforms the agriculture. From
what we see, it is likely to be a daydream of an idealist.