There has been lots of criticism of the `20 lakh crore ‘stimulus’ since its announcement by the prime minister. Some say, people wanted outright cash grants in the context of the Covid-19 crisis; but were given loans. Others call it a hoax since the direct financial commitment of the government in the package is less than 2% of the GDP, while the prime minister claimed it to be 10%.
But the most important twist in the entire exercise is a well-thought out ‘reforms’ plan, explained later by the finance minister in five tranches. The first broadly focused on small and medium enterprises; second on affordable housing and micro credit; third on agriculture; fourth on private sector entry and the fifth on rural employment guarantees. There is a clear bias in the reforms for the rural sector which the previous governments hesitated to introduce, perhaps for political reasons. India is no longer in the ‘shortages’ of 1950s and 60s and the ‘licence raj’ which was removed for the industry in the 1990 reforms should have been introduced for agriculture too much earlier. Indian agriculture is still bound by the essential commodities act of the 1950s when we are facing a problem of plenty in agricultural production. The farmers needed the freedom to sell their produce at the best price. They needed the advantage of the market economy, which others got, but not they, so far. The agriculture sector provides for 15 % of Indian’s GDP and yet is responsible for over 60 % of the country’s employment. The rules of the Agricultural Produce Marketing Committees (APMCs) needed to be redrawn to allow free inter-state trade. May be the farmers will not double their income soon as the prime minister had promised earlier; but this relief for the farming sector to generate more wealth for themselves was necessary. Essential Commodities Act (ECA) and APMCs are controversial issues and may be the present government took the advantage of the disaster management act to introduce the changes in these thorny areas without much criticism. After all, these are solid vote banks, and political parties have not dared to make much dent into these areas so far, because of obvious reasons.
A fair uniform price for farmers could only come with the opening up of the inter-state trade in agriculture, which was being stalled on the plea of the ‘concurrent list’. Ramesh Chander, Member Agriculture in the Niti Ayog makes it clear that article 301 gives full ‘freedom’ to trade and commerce which were so far held back by emergency laws like ECA and APMCs. India is no longer a food deficit country and the laws need to evolve with the changing times. The changes suggested in contract farming should also benefit the actual producers rather than the ‘managers’.
Possibly an emergency situation like the present one – with the Covid-19 pandemic, migrant labours, cyclones, and locust attacks – could make the government sit up and take such bold steps. But there are pitfalls. Who said there will not emerge a new kind of ‘middle men’ in agriculture, who taking advantage of the new freedom, will not force the prices to go up for food for the common man? But as the finance minister said, the government is just two months into the new financial year and again to use the budget jargon, we are just given the ‘budget estimates’; the ‘revised estimates’ are yet to come. The pandemic is still on the rise and the migrant labourers returning to home states are still a threat. There is plenty of scope for the government to add to the benefits announced - for example a social security scheme for urban labourers too, likes MRNEGA.