Farm Reforms 2020: A Divergent View

This is in response to the editorial “Imposing New Inequities” (EPW, 3 October 2020), which appears to be based largely on conjecture. At the very outset, the arguments are starkly reminiscent of the reasoning adopted by farmers and trade unions back in 1991–92. At the time, India saw strikes and demonstrations against the then government’s policy of economic liberalisation in general, and against the prospect of multinational companies entering India in particular; a move that catalysed six-fold growth of the national economy, which is currently the fifth largest in the world. The ongoing farmers’ protests appear to be similarly (mis)placed. Here, I evince the current reality of India’s agrarian market, demonstrate why the minimum support price (MSP) cannot be removed, and counter the narrative advocated in the aforementioned editorial.

India’s farmer is the only producer who is not allowed to decide the price of their own produce. Arhatis (commission agents) and mandis (wholesale marketplaces) collude to decide consumer sale prices while the Indian farmer earns little more than the government-guaranteed MSP. As a consequence of this collusion and the minimum guarantee, classic bottom-up pricing is discarded, and so is any hope of turning an appreciable profit.