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The Financial Express

Indian govt ready to put controversial farm laws on hold

| Updated: January 21, 2021 17:02:54


Farmers protest against the newly passed farm bills at Singhu border near Delhi, India, December 4, 2020. REUTERS/Anushree Fadnavis Farmers protest against the newly passed farm bills at Singhu border near Delhi, India, December 4, 2020. REUTERS/Anushree Fadnavis

India's government has offered to put three controversial farm laws, that have sparked major protests, on hold for 18 months.

Farmers have been camped at Delhi's borders since 26 November to protest against these laws that will further open up agriculture to the free market.

Farmer groups who are pressing for a complete repeal of the laws say they will consider the offer, reports the BBC.

This follows several rounds of failed talks between both sides.

Talking to the media after the meeting, farmer group leaders said the government was ready to form a special panel to review demands for minimum support price (MSP), and the laws.

The farmer groups have repeatedly said that they would settle for nothing less than a repeal of the laws, and the government has ruled out any rollback.

The government has said the reforms will not hurt farmers. But farm groups say the laws threaten decades-old concessions and subsidies they receive, thwart their bargaining power and expose them to the vagaries of the market and big corporate companies.

"We'll hold a meeting tomorrow and take a decision on the proposal," farmer leaders told news agency ANI.

India's Agriculture Minister Narendra Singh Tomar told reporters on Wednesday that the farmer leaders were taking this proposal "seriously". "I feel the talks are progressing in the right direction and there is a possibility of finding a resolution on 22 January," the minister said.

Earlier India's Supreme Court stayed the implementation of the laws "until further notice", and appointed an independent committee to broker a deal between the farmers and the government.

The farmers, however, have not accepted the committee saying that all of its panel members are pro-government. One of the members has also stepped down.

Meanwhile, farmers' leaders are likely to meet police officials in the capital, Delhi, today to discuss a lorry rally on 26 January, India's Republic Day.

The government has opposed the rally saying that it will hinder Republic Day celebrations but farmer groups remain insistent on holding the protest rally where they say tens of thousands are expected to show up.

The Supreme Court has refused to intervene in the matter after the government approached the top court. The court asked police officials to take necessary calls on law and order in the matter.

What exactly do the laws propose?

Taken together, the laws loosen rules around sale, pricing and storage of farm produce - rules that have protected India's farmers from the free market for decades.

One of the biggest changes is that farmers will be allowed to sell their produce at a market price directly to private players - agricultural businesses, supermarket chains and online grocers. Most Indian farmers currently sell the majority of their produce at government-controlled wholesale markets or mandis at assured floor prices.

The reforms give farmers the option of selling outside of this so-called "mandi system".

But it's unclear how this will play out in reality.

Farmers are mainly concerned that this will eventually lead to the end of wholesale markets and assured prices, leaving them with no back-up option. If they are not satisfied with the price offered by a private buyer, they cannot return to the mandi or use it as a bargaining chip during negotiations.

Are these reforms necessary?

Most economists and experts agree that Indian agriculture desperately needs reform.

More than half of Indians work on farms, but the sector accounts for barely a sixth of the country's GDP. Declining productivity and a lack of modernisation have shrunk incomes and hobbled agriculture in India for decades.

The government, meanwhile, provides farmers with generous subsidies, exempts them from income tax and crop insurance, guarantees a minimum price for 23 crops and regularly waives off debts.

But none of this seems to have helped Indian farming much as low incomes and debt continue to drive many farmers to poverty.

 

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