Make the most of the Supreme Court’s farm panel

By: |
January 18, 2021 6:00 AM

This is a chance for Punjab’s agitating farmers to negotiate a central package to help fund a crop diversification plan

But now that the panel is there, it is in everyone’s interest to give it a shot.But now that the panel is there, it is in everyone’s interest to give it a shot.

There is little doubt the Supreme Court (SC) erred in putting the central farm laws in abeyance and setting up a panel of experts who were to hear the agitating Punjab farmers and suggest a way forward. Since the laws were not unconstitutional, by putting them in abeyance, SC dealt a big blow to the government’s ability to govern. The resignation of BS Mann, one of the members of the four-member panel, even before the first meeting, only reinforces the fear that SC is going to have egg on its face; the farmers’ refusal to stop the capital’s gherao even after SC put the laws in abeyance was the first indication of the trouble SC’s plan would run into.

But now that the panel is there, it is in everyone’s interest to give it a shot. Sadly, farmers have refused to appear before it as they say it is packed with supporters of the farm law. That may well be true, but not appearing before the panel is probably a mistake.

Apart from casting aspersions on the intellectual honesty of the panel, the farmer unions and political parties that are supporting them don’t appreciate that the panel has their best interests at heart. While various Congress party leaders have argued that India subsidises its farmers very little compared to the EU or the US—and so must raise subsidy levels—FE columnist and Icrier professor Ashok Gulati, who is a member of the panel, was the first to argue, several decades ago, that India actually taxes its farmers by stopping exports or imposing stocking limits the moment various crop prices rise! This is not to say that Gulati supports legally guaranteeing MSPs—or substantially hiking wheat and rice MSPs—which is what the farmers and the Congress party want, but his approach will help farmers in even the medium-term.

More important, while talks between the Centre and the farmers centred around the repeal of the farm laws—once the Centre had abjectly surrendered on the issue of electricity reforms and stubble-burning laws—the panel offers Punjab’s farmers a chance to negotiate a much more meaningful package for the state.

As the graphic makes clear, Punjab has steadily lost its top position among agricultural states in the country. While its growth was around 2.5 times India’s in 1971-72 to 1985-86, it fell to around the same level in the next two decades and, over the last 13 years, it has been around half that of the entire country. There are many reasons for this, ranging from over-use of urea lowering soil productivity to excessive use of water causing salinity, but growing the wrong crop and lack of diversification are at the root of it .

While Punjab has remained focused on growing wheat and rice, the increase in MSP of these crops has been muted, around 21% over the past three years in the case of paddy and 14% in the case of wheat. Compare this with onions where prices rose by over 60% and potatoes where prices rose by more than 2.3 times. There is a lot more volatility in prices of fruit and vegetables (tomato prices barely rose over the last three years but rose by over 83% in the last two), but not diversifying its cropping pattern is the main reason for the state’s fall from grace.

MSPs of these crops can’t be raised by too much as the Centre has budget constraints and, if you raise the prices too much—as has already happened in the case of wheat—the ballooning stocks can’t even be exported; FCI has 42 million tonnes of extra stocks of wheat and rice precisely because there isn’t enough demand, either locally or globally, at the price at which they were bought.

What the panel can do, if the farmers choose to engage with it, is to come up with a diversification plan for Punjab that includes a generous dose of central funding. Indeed, recognising there was a problem, the Punjab government under Amarinder Singh set up a Group of Experts headed by former planning commission deputy chairman Montek Singh Ahluwalia, and one of the suggestions made by the Group a few months ago was to reduce the area under paddy by a third over the next 6-7 years and to diversify into maize, fruits and vegetables, dairy, etc; as it happens, using maize as cattle feed raises milk productivity dramatically.

While such a plan will involve paying farmers higher MSPs on other crops like maize, and perhaps even gap payments—till citrus trees start fruiting, assuming that citrus is planted—it can be funded by both the Centre and the states. The Centre’s FCI, for instance, would save around `5,600 crore a year from just getting less stocks that it has to carry; another `13,275 crore is spent by the Centre and the state on annual electricity and fertiliser subsidies, and so, as the diversification takes place, some part of this will be freed up. Nor is it that the state is not aware of the need to diversify away from wheat and rice; in 2006, it allotted 300 acres to the Bharti Group for corporate farming and Field Fresh, which works with 200 partner farmers in the state, is the largest exporter of baby corn from India today; then prime minister Manmohan Singh inaugurated the venture.

Even if the SC panel comes up with such recommendations on funding Punjab’s diversification, and also looks at ways in which to increase procurement from eastern UP, Bihar and West Bengal, it is not certain the agitating Punjab farmers will accept it, or even that it will find favour with the government. But, the panel’s skill lies in also convincing the Centre that its best bet is to start thinking along these lines.

To recapitulate, there can be little doubt that SC wanting to stand in judgment over a law cleared by the Cabinet and by Parliament is bad news for the country; but, if handled well, there is a possibility we can come out of this by limiting the damage.

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