Are Modi’s Agricultural Reforms Beneficial?

Indian Prime Minister, Narendra Modi, in Sept 2020, secured Parliament’s approval, of the 3 agricultural reform bills -passed vide ordinances earlier, in July, during the lockdown. Some likened it to the 1991 economic reform moment & others to the 1965 Green Revolution. That the bill was not referred to a Parliamentary standing committee but pushed through, vide a voice vote, without a division, was slammed by the opposition members, as undemocratic & against the principles of “co-operative federalism”, especially since “agriculture” & “markets” are “state subjects”.  The centre sneaked in the legislation by camouflaging it under “trade & commerce” – a subject in the “concurrent list”, on which the central govt. (Government of India GOI) law supersedes a “state law” -in the event of a conflict.

A model APMC ACT was released by the centre in 2003 & later again, in 2018, & having failed to convince states to pass the laws, bulldozed it, now,  through a central legislation.

Reforms – that are otherwise welcome – evolved without generating a consensus could impede private investment in agriculture – which the bill otherwise seeks to attract. However, it is important to note that the BJP opposed similar agricultural reforms - when initiated by the earlier UPA regime - & now the latter is slamming the former indicating that any party’s stand on policy is a function of where they sit – the ruling or the opposition benches. The much maligned “Babus” – an euphemism for the policy making Indian Administrative Service officers – provide continuity though.

Farmer agitations soon followed centred around Punjab & Haryana where most of the rice & wheat procurement happens in India as can be seen through The Food Corporation of India (FCI) data:

India produces 112 MT of rice & FCI procures 76.4 MT (68%) & 100 MT of wheat & procures 34.13(34%) of wheat. With such a formidable logistics chain in place, FCI should have been the largest exporter of rice & wheat in the world but is impeded by lack of exportable surplus (less than 5 lakh tonnes per annum) & competitiveness in wheat. India, however, is the largest exporter of rice (~10 Million Tonnes MT per annum of the global export market of ~40 MT) but FCI has no exports of rice since 2011 – except a meagre 19,980 Tonnes to Egypt in 2016-17 - which is surprising or rather intriguing.

Contours of the Bill:

The bills promise the following

(a)    The Farmers Produce Trade & Commerce (Promotion & facilitation) Bill 2020, opens up agricultural marketing & sale outside the Agricultural Produce Marketing Committee (APMC) to attract private competition, prohibiting state governments from collecting market fee, cess or levy outside APMCs. The bill removes barriers to inter-state trade to create a genuine “One Nation; One Market” & encourages e-NAM (Electronic National Agriculture Market). 

Reduction of inter-state trade barriers is welcome. 

The claim that the laws usher in “free markets” with farmers freed from the chains of middle-men, with a potential to secure higher prices, is hyperbolic. APMCs are marketplaces of private sellers & buyers & only when the Govt. enters it as a buyer, is a Minimum Support Price (MSP assured.  If farmers can indeed make more than MSP now why has the demand, by farmers, for making Minimum Support Price (MSP) a legal right – with no procurement below MSP been quietly ignored?

Farmers granted freedom to sell across state borders too is an exaggeration since 86% of Indian farmers own less than 2 hectares of land & it is uneconomical for them to transport produce to an alternate APMC - forget arranging for inter-state movements.

Prof. Ramakumar, of Tata Institute of Social sciences, avers that Kerala never had an APMC Act, Bihar abolished APMC, in 2006, & the current central law is a replica of the changed APMC law, by Maharashtra, in 2018 & none of these states have seen much of private markets & investments.

 

(b)    The Farmers (Empowerment & Protection) Agreement of Price assurance & farm services Act provides a framework for trade agreements for the sale & purchase of farm produce in contract farming. 

Formal contracts in sugarcane & poultry sectors & informal contracts in cereal production are common but lack of legal awareness, thus far, impeded the case of Small & Marginal farmers & is unlikely to change much without the creation of Framer Production co-operatives (FPOs) with the attendant collective bargaining advantage. The high cost of registering a contract encourages informal contracts with its consequent pitfalls; need for reducing same. The govt. wants the creation of 10,000 farmer co-operatives & promised credit of Rs 1lakh cr. vide National Bank for Agriculture & Rural Development (NABARD) to build agricultural infrastructure; Intent is welcome but challenges in execution persist. 

When prices rose above contract prices, there have been instances of farmers violating contracts & selling it to a higher bidder & the govt. withholding intervention fearing political ramifications. Likewise, the fear of private players taking advantage of the inherent power asymmetry to bind small & marginal farmers to unequal contracts is real especially under the new legislation that strangely “arranges for a bureaucratic dispute resolution mechanism to the exclusion of civil courts” as per the former Finance Minister P Chidambaram. 

(c)    The Essential Commodities (Amendment) Act removes cereals, pulses, oilseeds, edible oils, potatoes & onions from its ambit freeing up production, storage, transportation & distribution hoping to lure private investment into agricultural warehousing, cold storages et al. Stock limits shall be imposed only in the event of a 100% rise in retail prices of horticulture produce or 50% rise in prices of non-perishables or at times of war, famine natural calamity etc. 

The capital expenditure (Agriculture + non agriculture) of the centre has dropped to 1.6% & states to 2.9%, of GDP, & the bill appears an attempt at attracting private investment to cover up for the weak fiscal situation. While private investment is welcome, it will be interesting to watch how the govt. plans to manage private hoarding & black marketing induced irrational volatility in prices going forward, the prevention of which formed the very basis for setting up APMCs. Furthermore, private companies in India are busy deleveraging their balance sheets & Indian GDP is likely to retouch the 2019-20 figs only by early 2022-23 due to Covid-19 headwinds, inducing investment caution. Thus expecting private investment to rush into agriculture appears an optimistic assumption. Even if it does succeed, emergence of oligopolies cannot be ruled out.

Brief History of the APMC

While Bibek Debroy, Chairman, Prime Minister Economic Advisory Council (PMEAC)traces the origin of APMC to the Berar Cotton & Grain Markets Act, 1897, Harish Damodaran  states (Indian Express 27^th Sept 2020) that the first APMC legislation was made in Punjab, in pre independent India, in 1939, by Sir Chhotu Ram, the Development Minister of the Unionist Party – that provided for constitution of “market committees” with 2/3^rd farmer representation, to oversee the functioning of “mandis”, to curb the malpractices of traders. This was complemented by another law that made use of false weights & scales a cognizable offense. By early 1980’s most of the states had brought in a similar legislation & India, today, has about 7300 APMC mandis – both principal & sub market yards.

Dr Frank W. Parker, an agriculturalist from USAID (US Agency for International Development) & an advisor to the Indian Ministry of Food & agriculture proposed the MSP, in 1959, that was approved by the Minister C Subramaniam, in 1964, riding over the objections of the Finance Minister TT Krishnamachari who was perturbed by the likely fiscal & inflationary consequences. In 1965, Subramaniam – a true institution builder - started the Agricultural Prices Commission (renamed Commission for agricultural costs & prices since 1985) that recommended MSPs & Food Corporation of India (FCI) which started procurement from mandis from 1968. FCI which procured only 6.8MT, in 1968, increased it to 90.22 MT – 38.99 MT of wheat & 51.23 MT of milled rice, in 2019-20, valued at 2.15 lakh crores. India, which suffered with a burgeoning population & food shortages in the late 1960’s & lived on foreign food aid – that impeded national security & compromised foreign policy -  has now emerged as a food surplus state with overflowing granaries. The food so collected was routed into the Integrated Child Developed Scheme (ICDS), since 1975, Mid- Day meal schemes & Public distribution system (PDS) which helped reduce massive malnutrition levels prevalent.

This was a continuation of other reforms. The Zamindari abolition Act was passed, in 1950 & the agricultural land ceiling laws, were passed in the 1960’s were followed by redistribution of land to either tenant & landless farmers - an attempts at social justice & introducing a ”Ryotwari” system to improve productivity. Paradoxically, the fragmentation of land holdings is now cited as the reason for low investments & productivity & consolidation proposed albeit under contract farming.

 T Nanda Kumar, former agriculture Secretary GOI writes, in the Financial Times, that APMCs created infrastructure for auctions – for a decentralized democratic system of price discovery - storage space & some rural marketing infrastructure too vide cess paid by buyers & not tax payers; licencing of traders was done to ensure prompt payments. However vested interests soon took over.

The cess collected by the Mandis was not part of the state budget & was used for discretionary rural development spending on infrastructure which was then welcomed - in the absence of PM Gram Sadak Yogana (PMGSY), Mahatma Gandhi National Rural Employment Guarantee Act ( MGNREGA) or  Members of Parliament Local Area Development Scheme(MPLADS. State governments could not resist the temptation of increasing cess – initially between 0.5 -1% - to unsustainable levels – 5% or more - & “revenue interests” prompted the packing of these boards with govt. nominees, administrators superseding boards culminating in farmers losing voice. FCI - & by implication GOI - took the hit especially in states where it did most of the procurement.

Commission agents arose -who initially played the role of aggregators from small farmers - & registered traders, eventually formed coteries effectively taking over management. New licences were deliberately denied to protect vested interests & price discovery & display of prices became a sham. Traders increased their commission much to the chagrin of the FCI.

The demand for reforms was thus a natural consequence.To arrive at optimum policy solution need to evaluate:

Facts on the Ground:

(1)Agriculture supports the largest chunk of the workforce at 43%: 69.7% of Indian workforce of 29.8 cr. was employed in agriculture in 1951 which dropped to 54.6% of 48.1 cr. by 2011; Niti Ayog chief Amitabh Kant claims the current fig at 43%. Despite the fall in figs. , fact remains that a majority of the Indian workforce is still dependent on agriculture & hence the need to focus on their problems.

(2)Low Farm Gate to Consumer Plate Prices: As per a 2019 RBI report the farm gate prices vary between 28% -78%of the retail prices, accentuating a demand for disintermediation to improve farmer incomes. Traders & Retailers mark-up is higher for perishables indicating the urgent need for improving cold storage facilities to reduce waste. As per the Central Institute of Post-Harvest Engineering & Technology (CIPHET), 18% of fruits & vegetables in India rot due to unavailability of storage while there are other studies that peg it closer to 40%.

(3)Predominance of small farmers impedes price negotiation: 86% of Indian farmers have less than 2 hectares of land that accounts for 47% of total cultivable area (Agricultural Census 2015-16), indicating limited negotiation capacity, for small & medium farmers,  in the absence of Farmer Producer co-operative structures that build successes in the milk movement under brand Amul . But political capture of the co-operative movement for sugar, milk & financial services does not inspire confidence.

	Total Holdings
Area in Hectares	Number		Area
Below 0.5	70468756	48.1%	16472957	10.4%
0.5-1.0	29782553	20.3%	21450395	13.6%
1.0-2.0	25809332	17.6%	36150710	22.9%
2.0-3.0	9827676	6.7%	23374741	14.8%
3.0-4.0	4165538	2.8%	14244565	9.0%
4.0-5.0	2366241	1.6%	10457933	6.6%
5.0-7.5	2352020	1.6%	14146575	9.0%
7.5-10.0	843219	0.6%	7205918	4.6%
10.0-20.0	693375	0.5%	9066527	5.7%
20.0 & ABOVE	145031	0.1%	5247011	3.3%
ALL CLASSES	146453741	100%	157817336	100%

 As per Agricultural Scientist, Devinder Sharma, the size of an average land holding in US is over 160 hectares & in Australia more than 4000 hectares. If open agricultural markets, in US & Europe – in existence for 6- 7 decades had been so benevolent the crisis would not have been so severe as to demand an annual subsidy of $100 billion in Europe; an average US farmer earns an annual subsidy of $60,000 against $200 in India.

(4)Unviable occupation induces suicides: About 12000 farmers commit suicide every year (As per govt. data 12360 in 2014, 12602 in 2015, 11379 in 2016) indicating that the sector is indeed stressed; loan waivers announced by all parties is a temporary band aid that does not address the root causes.

(8)Rescue vides MSP at 50% over cost of production:  The MS Swaminathan committee recommendations 2006, suggested MSP at C2+50% over the production cost. There are 3 definitions of production cost

(a)A2: Actual paid out in cash & kind on seeds, fertilizers, pesticides, hired labour, fuel, irrigation, & other inputs

(b)A2+FL: Actual paid out cost + imputed value of family labour

(c) C2 : Sum of paid out costs + imputed value of family labour +Interest on the value of owned capital assets +Rent paid on leased land

As is evident C2 > A2+FL > A2

Govt. has conveniently promised farmers 50% profit over cost & announced MSP which is A2+FL +50%.

(5)India offers low MSP & no procurement support for about 20 products: India offers lower MSP than comparable contries except Vietnam & hence there is scope for enhancing same even while working at disintermediation.

Data from page 61 of Shanta Kumar Committee recommendations

GOI releases MSP for 23 products – 7 cereals (Paddy, wheat, Maize, Sorghum, Pearl Millets, Barley & Ragi)  5 pulses (Grams, Tur, Moong, Urad, Masoor) 7 oilseeds (groundnut, Rapeseed & mustard soyabeen sesamum sunflower seeds, , nigerseed, , safflower) & 4 cash crops – cotton, jute, sugarcane, copra & de-husked coconut) but procurement by FCI is done only for rice, wheat & partially for cotton & some pulses. Bereft of a procurement mechanism, MSP on the remaining products is a farce allowing private players do secure products at 15-20% lesser than the MSP announced.

Lured by procurement support farmers have overproduced water guzzling crops like rice & wheat unlike millets & sorghum depleting the water table demanding a correction to be effected in cropping patterns. As per the PRS Legislative Research data India consumes about twice the water to produce a unit of output demanding the use of drip & sprinkler system.

Average amount of water needed to grow crops(Cubic metres/Tonne)
	Brazil	India	China	US
Rice	3082	2800	1321	1275
Wheat	1616	1654	690	849
Cotton	2777	8264	1419	2535
Source:National Water Footprint Account UNESCO-Institute of water resources: PRS

 

As per the same data, the per capita annual availability of water has reduced from 1816 cubic metres in 2001 to 1544 cubic metres in 2011- a dip of 15% & the situation is getting worse. The water table has dipped substantially in Delhi, Punjab, Haryana & Rajasthan.

As per capita incomes of societies increase, the consumption of proteins – pulses, eggs, milk, meat etc. – increases & Indian food inflation during the last 2 decades was on account of such shortages indicating the need to demarket cereal production & incentivize pulses & oilseeds production.

(6)Forced Procurement Financial Mess of the Food Corporation of India Under political pressure FCI has been forced to procure much beyond the buffer stock norms needed for food security.

Pg 16 of Shanta Kumar Committee recommendations

The cost of carrying excess stock during the period 2011-14 was about 1 lakh cr. Per annum.

The food subsidy in India is about 2 lakh crores  but the same is rarely passed on timely to the FCI which does the procurement. They have now been pushed to fund their expenses by drawing on high cost small savings schemes. Lack of storage space meant placing the stock in the open to rot especially during the rainy season & later sold at a discount to breweries. There is hence an urgent need to reform FCI.

(6)Agricultural Trade Disputes on the rise: Export markets are facing headwinds. Countries like US & Canada have dragged India to the dispute resolution mechanism under the World Trade Organization (WTO) on subsidies on rice & wheat; likewise, Brazil, Australia & Guatemala on sugar subsidies. As per WTO mandate, agricultural subsidy cannot exceed 10% of the value.  Input subsidies like free water, electricity, subsidized fertilizers & MSP have been cited as the villains by the complainants who are demanding reduction of the same & opening up of agricultural markets & India might have to opt for some compromise as way forward if it wants a rules based international trade order that has served it well to prosper. This shall impact farmers.

As per the Food & Agricultural Organization of the United Nations, India is the 2^nd largest producer of rice in the world,  but the largest exporter with over 25%% market share & growing share further might not be easy.  Global rice trade is about 40 MT per annum & India exports about 10MT. Increase in production worldwide led to price pressures because of which  2018 prices were nearly equivalent to those in 2009 indicating the urgent need for India to change cropping pattern away from rice.

On wheat India faces quality issues & lack of competitive advantage due to relatively higher MSP as compared to formidable competition from Australia, Ukraine, Russian Federation & US. While global wheat trade is 170 MT per annum, India exported about 5 lakh tonnes in 2019-20 largely to Nepal (~2 L tonnes)

As per US FA during the year 2019-20 India is expected to produce 112 MT of Rice & consumes 102 MT while producing 100 MT of wheat consuming 91.5 Mt & using 5.5 MT as feed.  Thus India can afford to increase wheat production but by rationalizing MSP to help export competitiveness while there is a need to shift from rice production. Incidentally, rice is produced across the country while wheat is produced predominantly in the North & Central region. Productivity of wheat in Punjab/Haryana is comparable to the global figs. while lower irrigation facilities impedes production in the drier central region; need for producing region specific seeds to enhance productivity.

Reforms & attendant challenges:

(a)Reform 1 - Need for Rationalizing subsidy: Fertilizer subsidy of about Rs 75000 cr per annum on nitrogenous (N) fertilizers – urea - & none on phosphorous(P) & Potassium(K) has led to excessive usage of N shifting N:P:K ratio to 6.1:2.46:1 in 2017-18 against an ideal 4:2:1. The Shanta Kumar Committee therefore, recommends removal of subsidy & direct benefits transfer at the rate of about Rs 7000/ hectare.

(b)Reform 2 – Need for changing cropping patterns: Former Union Agricultural secretary Siraj Hussain (The Wire 24/12/20) writes that farmers face a catch 22 situation: when there is a bumper harvest, prices crash leaving farmers to suffer while govt. intervenes to cool prices when there is a shortage & prices rise preventing farmers from making a killing. Paradoxically, higher yields per acre may actually drop prices further; agricultural exports, in 2018-19, contributed $39 billion (Basmati $4.7billion, non-basmati 3.03 billion) & there is a need to export more. He suggests that maize consumes less water & offers both domestic & export markets but needs addressing  of the unavailability of driers at mandis & expensive seeds sold by private players. India sells only $1.7 billion worth of fresh fruits & vegetables when there is an international market especially for organic output.

As per the Food & Agricultural Organization (FAO), global agricultural exports increased from $570 billion in the year 2000 to $1.6 trillion in 2016. But the high growths of the 2000-08 period was replaced by contractions during the 2008-12 period, courtesy the global financial crisis & sluggish growth thereafter. Hence increasing exports might not be easy.

As per a Lancet study Indian population shall peak at 161 crores by 2048 (~ 0.4% per annum) from 138 cr in 2017 & then drop to 109 cr by 2100. Global population too shall peak at 973 cr by 2064 & then drop to 879 cr. by 2100. Consumption of cereal per capita in India is higher in rural than urban & increasing urbanization till 2048 - which is inevitable - shall slow consumption further. Indian agriculture policy should incorporate the effects of both population peak by 2048  & consumption drop vide urbanization. There is hence a need to shift cropping patterns away from rice & attempt to enhance competitiveness at wheat production since local farmers are surviving only because of a 30% import duty protection.

(c)Reform 3 –Need to shift workforce from agriculture to manufacturing & services:  Agriculture accounts for 15% of GDP but employs 43% of the workforce alluding to low productivity. Underemployment is rampant & improvement in productivity theoretically demands improving yield per acre with a simultaneous reduction in quantum of workforce.

While accelerating exports, at least 30% of the workforce – about 15 cr.- needs to shifted out of agriculture into manufacturing or service sector jobs. As per National Sample Survey Organization (NSSO) 6 cr. Jobs were created during 1998-2004 while 1.5 cr. jobs only were created during 2004-11 & the latest 2018 report shows more dismal figs. Thus while agriculture is un-remunerative the lack of an alternate profession accentuates the mess.

(d)Reform 4 – Need to revisit FCI Mission: The Shanta Kumar Committee has suggested the following

(a)Direct Benefit transfer of Rs 7000 per hectare & free up the pricing of urea to ensure rationalization of NPK fertilizer usage.

(b)In 2013 cost of rice procured was Rs 20 & sold at Rs 3 to the beneficiaries of the Food bill incurring a subsidy of Rs 17/Kg. The logistics & storage costs were Rs 10 extra & hence the resultant subsidy was Rs 27/ Kg (Rs 30 – Rs 3). DBT of Rs 22/Kg - as part of the food bill - recommended for the bottom 40% of the population, instead of 67% of the population (75% of rural & 50% of urban); issue wheat & rice at 50% of MSP for non-Antyodya households

Both the above measures shall help reduce pricing distortion of cereals & fertilizer markets.

©FCI to hand over the procurement responsibility in Punjab, Haryana, AP, Chattisgarh, MP & Odisha  states that have gained  sufficient  experience established infrastructure  & concentrate on states where farmers suffer most from distress sales - Eastern UP, Bihar, WB, Assam etc.

(c ) Statutory levies including commissions to be brought down uniformly to 3% & states losing revenues compensated with a diversification package for the next 3-5 years.

(d)Revisit MSP policy: No use announcing MSP if not supported by procurement infrastructure. Synchronize trade policy with MSP policy for announcement of an MSP for pulses (say) is worthless in the event of imported pulses being cheaper

(e)GOI should explore cash compensation if prices fall below MSP without physically handling grains

(f)Give 6 months of PDS ration to consumers immediately after procurement season to reduce costs & provide subsidized storage bins

(g)Proactive liquidation of stock at FCI into the market when in excess of buffer stock

(h)Gradually movement of grains to be containerized to reduce transit losses; outsource operations & focus on bulk rather than bagged

 (i)Open up cereal imports so that cereals are imported from Myanmar to North eastern states - to reduce costs -  unlike transport from the mainland as is the current case

(e)Reform 5 – Need to redesign APMCs

Nandakumar has the following suggestion for improving the functioning the current APMCs

(a)Change the law to make them farmer organizations again with 2/3^rd representation of farmers / farmer producer organizations, reducing govt. nominees to two.

(b)Remove by law cadre based govt. controlled employees to eliminate scope of frequent govt. intervention

(c)Bring in professionals by allowing board to appoint chief executive from the open market to function like a well-managed co-operative.

(d)Remove ‘geographical constraints to allow farmers to sell in any market yard

(e)Remove condition of a separate license for each market & replace it with the launch a hassle free on line single license for the entire state.

(f)Shift to the registration of buyers system with appropriate guarantees to avoid payment defaults thereby removing the coterie of commission agents.

(g)Collect a cess less than 1% & service charges, if required, to use same to build modern infra – modern storage, cold chain, state of art auction halls, fintech, hygiene etc.

(h)Make offering of “farm services” – to support farmers - a priority

(i)Prune the commodity list for focus

Prof Ramalumar says that transaction costs of retail firms that set up collection centres in rural areas was high & hence many shut shop due to lack of viability. Transaction costs if higher than Mandi taxes shall be passed on to farmers as lower prices. He therefore pushes for APMC reform – including the reduction of entry barriers to small trader’s registration to enhance competition - & establishment of FPOs & cooperatives as a solution. He bats for higher public investment in agriculture with private sector as a follower.

As per M KrishnaMurty, Senior Fellow at the Centre for Policy Research, farmer protests followed, the Govt of MP, amendment on allowing single licence yards, outside of mandis but over time led to stronger mandis improving their competitiveness, upgrading systems & processes besides recogniizng unique strengths.

Fortunately, Karnataka, Punjab & Haryana have recently reduced the market fees displaying a keenness to reform.

The demands of the stakeholders: Farmers, Traders & Consumers

While welcoming electronic National Agricultural Markets (e-NAM), farmers demand procurement at MSP, app based market prices availability & storage facilities.

 Traders demand abolishing APMCs, credit availability, futures trading & allowing exports/imports.

Suggested Way Forward:

(1)Launch Farmer Markets in Urban centres to reduce intermediation to enhance farmer incomes: There are some best practices of states worth a national replication. Ryathu Bazaar of undivided AP or Uzhavar Sandhai of TN – where farmers sell directly to consumers in designated spots at urban centres - have found that farmers secure 15-40 % more than wholesale prices & consumers pay 15-30% less (GOI 2011 RBI report 2019). This agriculture is a "state subject" this shall be the states' responsibility.

(2)Make MSP a legal right: There is a case for making MSP a legal right even if it risks playing against free market principles combined with a rationalization of rice & wheat MSPs to reduce water consumption, production & shift cropping patterns towards maize, pulses, oilseeds, fruits & vegetables. Reform APMCs as per Nandakumar’s suggestions & make them more efficient to help farmers negotiate better prices from private players.

(3)Refocus FCI on exports: FCI mission statement should be amended to focus on export markets too to take advantage of its massive logistics set up. Implement Shanta Kumar committee recommendations on DBT for beneficiaries of NFSA (National Food Security Act), & DBT of fertilizer subsidy of Rs 7000/hectare & deregulate urea pricing

(4)Nudge farmers to diversify Income streams: Ultimately, doubling of farmer incomes needs diversification of farmers into horticulture, poultry & animal husbandry even as govt. should accelerate efforts at shifting at least 15 cr. farmers into manufacturing – especially labour intensive leather, footwear, toys, textile etc. - & service sector jobs. Landless labourers should perhaps be the first focus group. Else Indian demographic dividend shall emerge as a demographic curse.

Conclusion:

Protecting 43% of workforce surviving on agriculture is a must without sacrificing the inflation concerns of 100% of the consuming population; farmers too are consumers of products that they do not produce. This call for rationalizing the MSP of water guzzling crops like wheat, rice, sugar etc. & a shift to pulses, oilseeds, maize, fruits, vegetables etc. to ensure sustainable agriculture & rise in water tables.

Increasing Exports & domestic consumption would have helped farmers. Unfortunately, however,  as per Siraj Hussain, rural spent per capita in 2017-18 was Rs 583 Against Rs 643 in 2011-12 & urban spent Rs 946 against Rs 943 respectively (both figs. in real terms)  indicating that purchasing power is not keeping pace with the rise in production. With per capita incomes under pressure, an increase in agriculture production cannot be absorbed in India & export markets, since 2012, have experienced anaemic growth. India became the largest producer of sugar in the world, last year but found it difficult to sell the excess production despite the loss of crop in Brazil.

The farm bills open up inter state trade, on which the centre has jurisdiction, but agriculture is a "state subject". Opening up mandis -  public or private in a 5 Km radius of every farmer - to aid ease of selling shall remain a state's job. Centre announces MSP for 23 products but with procurement support only for rice, wheat, some pulses & cotton, private sector buys all the remaining 19 products, from the farmers, at a 15-20 discount. Either the govt should support all 23 products with procurement support to secure farmers 100% MSP or make MSP a legal right - no buying even by the private sector at lower than MSP rates -  or stop announcing MSP since MSP  without procurement support is merely paying lip service. The PM has announced that MSP shall not be discontinued & MSP has not been made a legal right too. Thus farm bills though a welcome reform is inadequate since it is a case of merely praying that "free markets" do the trick when there is a precedence of Europe, under agricultural free markets for over 6 decades, still struggling & supporting farmers with an annual subsidy of $100 billion.

India has an option of marrying agriculture with Industry, shifting farmers into manufacturing & services or else staring at a demographic nightmare. The clock is ticking!!