Refuting the remaining arguments against farm liberalisation

The surprising thing about those who oppose liberalisation in agriculture and demand mandatory MSP is that they do not care to publish detailed reasons for their demands. The only attempt at making an argument was by Avik Saha but it was a disappointment. Then Yogendra Yadav apparently made a case for mandatory MSP but he entirely lost the plot – not one of his four demands involves guaranteed MSP. Instead, he demanded an increase in the quantity to be purchased under MSP, and even 10% would satisfy him.

Then there are those like Rakesh Tikait whose words mean nothing. When the farm laws were announced, the news portal Live Hindustan reported on 4th June 2020 from Muzzafarnagar that he said: “Kisanon ki varshon purani maang puri hui.” The report said that the reforms that formed part of the farm laws were a long-standing demand of Bharatiya Kisan Union. But then he flipped immediately, brought in his supporters to block the roads to Delhi, and said: “Bill wapsi nahin toh ghar wapsi nahin”. And after the bills were repealed, he is now saying: “MSP, Abhi Nahin Toh Kabhi Nahin.” Does even he know what he wants?

It also turns out that there are many Bharatiya Kisan Union groups. They apparently all came together once under Sharad Joshi’s leadership but given the visceral differences amongst them, splintered away. These include a group – also called Bharatiya Kisan Union – that is led by Bhupinder Singh Mann, which has been demanding greater liberalisation. However, in a strange twist, Mr Mann wrote on 1st September 2020 to the PM that the farm laws have “created a panic among farmers that Government is doing away with the MSP and farmers will be thrown before private purchasers. … To allay the fears that MSP will be done away with, another ordinance should be brought in to guarantee that farmers will get the MSP. This assured purchase on MSP should be legally binding on all buyers, government or private, with strong penal action on defaulting buyers”.

These are not the only groups that contradict themselves at every step. Today, the Congress is actively demanding mandatory MSP. Randeep Surjewala has said: “Why is the government running away from giving legal responsibility for MSP? Who will take the responsibility for MSP outside the ‘Mandi’?” Ashok Gulati reported on 28th September 2020 that Congress is asking MSP to be made legal, implying that all private players buying below this price could be jailed. And on 3rd December 2021, Rahul Gandhi tweeted “MSP par kanoon kab?”

But there are two huge twists to this demand of the Congress party. On 2nd March 2011, Mr Modi, as Chairman of the Working Group on Consumer Affairs, submitted the Report of Working Group to the then Prime Minister Dr Manmohan Singh. Under the terms of reference item “Reducing intermediation costs and for reducing gap between farm gate and retail prices”, the report recommended “Enforce MSP: Since intermediaries play a vital role in the functioning of the market and at times they have advance contract with farmers. In respect of all essential commodities, we should protect farmer’s interests by mandating through statutory provisions that no farmer – trader transaction should be below MSP, wherever prescribed”.

MSP was not even tangentially relevant to the terms of reference of the Working Group, which was focused on consumer welfare, so the MSP recommendation was entirely uncalled for. Moreover, no connection was made between an assertion about intermediaries and the MSP recommendation. There is no evidence that Mr Modi personally advocated mandatory MSP at any time, either.

Congress was in power till 2014 and did not implement this “statutory MSP” recommendation of Modi since it did not make sense. Likewise, Modi has been in power since 2014 and has not implemented “his own” 2011 recommendation since it makes no sense.

But today, Congress has flipped not just on MSP but also from its 2019 manifesto, which said: “Congress will repeal the Agricultural Produce Market Committee Act and make trade in agricultural produce — including exports and inter-state trade — free from all restrictions”. Further: “We will establish farmers’ markets with adequate infrastructure and support in large villages and small towns to enable the farmer to bring his/her produce and freely market the same”. Basically, the Congress foreshadowed the 2020 reforms, which are now rejects.

Dirty political games are being played. Absolutely none of these parties or unions – Congress, BJP, BKU – cares for the farmer. There is no consistent policy within the various branches of the BKU or within any of the major parties.

When Rakesh Tikait blames Modi for not following up on his MSP recommendation of 2011, he should ask, instead: Why did Congress not implement that recommendation in 2011 and why did it want to open up the market in exactly the manner that the 2020 laws did? Congress also needs to explain why it lied to voters in 2019 about its policies and why (if it is genuinely wedded to it) it did it not implement mandatory MSP in 2011.

Rakesh Tikait has recently said: “Our main demand is the MSP. If this demand is not met, we will oppose the Bharatiya Janata Party.” The entire drama is about politics and power. Rakesh Tikait was a failed politician: he is looking for a safe seat.

Leaving aside the flip-flops of Tikait and the Congress, is there any consistent argument made by anyone at all, against farm sector reforms?

All I could find is an argument by Devinder Sharma who said that in Bihar, where the APMC Act was removed back in 2006, farmers were supposed to get higher prices but didn’t. I don’t know whether he has conducted a statistically robust analysis to support his claim, but this much one can say: as agricultural productivity increases, relative prices will tend to fall even as the total output and revenue increases. Farmers in Bihar and other states, where the APMC mandis are not mandatory for trade, are likely producing more and selling their produce where they get the highest value.

But the more important issue is that the Bihar reforms are nowhere close to the kinds of reforms India needs. Using the strawman of half-baked “reforms” in Bihar to reject fundamental reforms is a sure way to ruin India’s farmer.

I have outlined elsewhere a vast set of reforms that are needed before India’s farmer can be genuinely liberated from the clutches of the government. A White Paper is the need of the hour.