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Home Opinions Part-9: What is the path forward?

Part-9: What is the path forward?

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vinod2ahttp://vinodaravindakshan.com
Vinod is a HR leader for a leading tech company in the Silicon Valley. He writes on topics including the economy, science and education. He is an alumnus of IIT Bombay, Cornell University and the University of Wisconsin-Madison.

The current reforms make perfect sense. There are many demands of protesting farmers, many of them obtuse. The prime concern seems to be mistrust of the private sector and questioning the intentions of the government. Much of the farmer opposition is based on “what if” scenarios which is based on wild speculation about their futures. Many are slippery slope arguments, and arguments on conjecture. Even the US Court recently struck down petitions who are based on speculation about the future.

One must understand that democracy is fought through the ballot box and in the legislature and not on the streets. People in India voting in majority for a certain government repeatedly does mean that they are probably looking for reform. A couple of disgruntled elements, pulling together a crowd of tens of thousands of people, cannot either reflect the aspirations of 1.4 billion people or hold the future of everybody else to ransom.

By demanding more MSP and trying to finish the private sector by asking for mandatory MSP, can the farmers decide that India should stop investments in infrastructure, education, schools, defence, manufacturing and route all their funds only to farmers?

1) Repeal of three new agricultural laws.

I argue that demand 1) is disastrous because considering the nature of Indian democracy, this means that nobody can ever reform agriculture in the future. If the current dispensation cannot make any changes to agricultural laws, this will encourage everybody in the future. The current government also has a brute majority which probably will not happen for a couple of lifetimes. In the meantime, farmers will destroy both their livelihoods and those of everybody else in India because their current approach is not sustainable.

2) Guarantee of MSP to ensure procurement for all 26 crops

I have already argued that demand 2) belies a lack of understanding of even basic laws of economics. If you want to destroy the private sector which buys 94% of foodgrains and force the government to a single point agenda of buying foodgrains, please go forward replicating the blunders made by Russia and Venezuela to economic catastrophe and ruin. They had massive oil resources to back them up which India doesn’t, which means that India will face even further deprivation.

  • 3) Withdrawal of the Electricity (Amendment) Bill
  • 4) End the fine and jail sentence for stubble burning
  • 5) Slash diesel price for agricultural use by 50%

Demands 3), 4) and 5) are for the long-term sustainability of the Indian environment. If farmers want to adopt a scorched earth mentality of not caring for the future and destroying the future of everybody else in the bargain, they could go forward. It is difficult to make a case for continuing to burn stubble. But these are the supposedly non-political “farmers” who are choosing anarchy by destroying mobile towers and tool booths, to teach private players a lesson.

But again, to be fair, these reforms are not as pressing as the others.  Implementation could wait a bit longer depending on how serious one thinks global environmental issues are.

  • 7) More MSP as recommended by the Swaminathan Commission
  • 8) Written assurance on MSP

Demand 6) will bankrupt the Centre eventually over time as more farmers move into making wheat and rice. They will buy foodgrains to rot in the granaries and will not be able to sell the produce in the open market except at a loss. Demand 7) is something the government could promise for its own procurement, but would be insensible for the government to promise on behalf of the private sector.

These demands will also prevent farmers from shifting to other crops which are more suited for India and are more remunerative. Farmers should ask for more access to the open markets and not for increased protection. They should be asking the government to step away rather than asking them to be more involved. Farmers should be asking for more logistical, supply chain and distribution help rather than asking for just pure MSP increases.

A perfect example of a hamheaded approach of the government is when it bans export of food staples and vegetables like onions at the slightest sign that prices for Indian consumers are shooting up. If farmers can get higher prices outside India, the exports should not be blocked. Governments are always trying to balance the interests of consumers and farmers. But asking for increased Government presence is typically an invitation to disaster. The IIM experience with the centre is a good example that governmental interference can be counterproductive.

What will happen if other states also begin to demand MSP purchases like the situation in Punjab and Haryana. Since the Government granaries are full and there is no offtake, what will they do with additional stock? And don’t farmers have nothing more profitable to do except produce foodgrains nobody wants? Where will the money for additional purchases of foodgrains come from? And if the groundwater reserves dry up, wouldn’t all this madness will come to a stop immediately? Why are farmers asking questions about long term sustainability?

  • 9) Centre should not interfere with state and decentralize
  • 10) Withdrawal of cases against all activists, poets, intellectuals and writers
  • 11) Release of accused booked under Delhi riots and Bhima Koregaon violence

Demands 8), 9) and 10) are very political demands and have no connection to agricultural law reform.  Regarding demand 8), the Indian constitution guarantees a top-down administrative model. Nehru always wanted extreme centralization and was inspired by Stalin to create his vision of a socialist India. Neither Nehru or his scions were ever never known for consultations with states on critical matters. The 1991 economic liberalization and other reforms were pushed by stealth and not by open discussion. Even parties like the BJP opposed liberalization at that time. To be fair, endless consultations prevent reforms when it is most needed. Inspite of every party wanting agricultural reform at some stage, they become blatantly partisan when they are in the opposition. These bad faith positions ensures that discussions are typically forgotten when reforms are driven by different governments. This has been the bane of Indian democracy. There is very little appreciation of a long term strategic self interest.

While decentralization is a valid and sensible ask, the best way to make this happen would be through constitutional amendments. But since the central governments would never want to let go of their unrestricted monopolistic powers, there will be no easy solution. This demand will continue to be an unattainable goal. The police and judicial system should adjudicate on demands 9) and 10), and ways to restore faith in them should be found through reforming the structure of democratic polity, and not by bypassing them through Civil disobedience and instigated unrests.

The Central government is not totally blemish less in this episode. They have enough political goodwill to ensure that farmers rally to their cause. While the approach may look hurried, they should find a way to compensate atleast in the short term, those middlemen who are most impacted by the changes. Even the erstwhile royal families who were impacted by the privy purses act, both seceded to India and moved away from privy purses over time, as it was a gradual transformation. Moving from agriculture to another sector is a difficult ask and should be accompanied by changes in industrial laws, legal systems, investments in education, upskilling and breaking stranglehold of unions. Hopefully these changes are the beginning of meaningful changes in other sectors. However jerky the reform journey will be, Indians meanwhile have to decide whether they want to embrace change or become a relic of the past. 

Ultimately prices are a tug of war between farmers and consumers. Under the existing model, only one of them can win at the other’s expense. Either farmers get compensated well for their produce and consumers complain of high prices, or consumer get produce at dirt cheap prices where farmers get shafted. The only way to break the logjam is to remove the middlemen, dramatically improve efficiency, and make sure that both farmers and consumers benefit. Programs and packages to diversify crops will help.

If this is the way Indians embrace reform, it is sad. Even a baby who refuses to leave the protection of the mother for fear of the world outside, will find its adult phase of development severely stunted. It is the same with the protesting farmers who refuse to move away from the maternal government markets and face the world market boldly.

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vinod2ahttp://vinodaravindakshan.com
Vinod is a HR leader for a leading tech company in the Silicon Valley. He writes on topics including the economy, science and education. He is an alumnus of IIT Bombay, Cornell University and the University of Wisconsin-Madison.

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