IAS Gyan

Daily News Analysis

Explained Ideas: The farm bills as a step in the right direction

28th September, 2020 Economy

Context: The Opposition is misguided but the government must get its act together.

About: The passing of the farm bills in both the Houses of Parliament has sparked a major controversy in the country.

  • The economic rationale of these pieces of legislation is to provide greater choice and freedom to farmers to sell their produce and to buyers to buy and store, thereby creating competition in agricultural marketing.
  • This competition is expected to help build more efficient value chains in agriculture by reducing marketing costs, enabling better price discovery, improving price realisation for farmers and, at the same time, reducing the price paid by consumers.
  • It will also encourage private investment in storage, thus reducing wastage and help contain seasonal price volatility.

Why are farmers unwilling to trust the govt’s farm reforms?

  • “It is because of these potential benefits that are compared with the legislation to the de-licensing of industry in 1991,” But sometimes good ideas/laws fail because of bad implementation.
  • Just to cite an example, a scheme called TOP (tomatoes, onions and potatoes) to stabilise the prices of these farm products through processing and storage was launched with an allocation of Rs 500 crores for it.
  • But even after three years of the scheme, not even 5 per cent of the money promised has been spent. No wonder, the government is back to export bans of onions, fearing a spike in onion prices.
  • This is contrary to the signal that the government wants to give through the farm bills that farmers have the freedom to sell.
  • “It seems the government has one foot on the accelerator to liberalize agri markets, and the other foot is on the brake (ban on onion exports). All this dents its credibility,”
  • “(The Opposition) is asking MSP to be made legal, implying that all private players buying below this price could be jailed. That will spell disaster in the markets, and private players will shun buying,”