Punjab farmers will benefit from SC panel

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Updated: Jan 21, 2021 8:59 PM

This is a chance for Punjab farmers to negotiate a Central package to help fund a crop diversification plan

Farmers protest against farm lawsMore 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.

There is little doubt the Supreme Court (SC) erred in putting the central farm laws in abeyance and in 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 SC has done what it has, it is important everyone give it a shot. Sadly, farmers have refused to appear before the panel on the grounds that it is packed with supporters of the farm laws. The panelists may well be supporters of the farm laws, but not appearing before the panel is probably a mistake.

Apart from casting aspersions on the intellectual ability of the committee, the farmer unions and political parties – like the Congress – that are supporting them don’t appreciate that the agriculture experts will probably write a report that is in their favour. While various Congress party leaders and spokespersons have argued that India subsidises its farmers very little compared to the EU or the US – and so can afford to spend a lot more in doing so – 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 on various crops the moment their prices rise! This is not to say that Gulati is a supporter of legally guaranteeing MSPs – or of hiking MSPs on wheat and rice by larger amounts – which is what the farmers and the Congress party want, but his approach will probably 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 prime position among agriculture 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 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 at the root of it is growing the wrong crop and lack of diversification.

While Punjab has steadfastly 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 fruits and vegetables (tomato prices barely rose over the last three years but rose by over 83% in the last two years), 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 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 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, recognizing 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 if citrus in planted – it can be funded by both the centre and the states. The centre, for instance, would save around Rs 5,600 crore a year from just getting less stocks from Punjab that FCI has to carry; another Rs 13,275 crore is spent by the centre and the state on annual electricity and fertilizer subsidies so, as the diversification takes place, some part of this will be freed up. And it is not as if the state government is not aware of this; 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, and 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 its skill lies in 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 restricting the damage.

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