Indian farmers started protesting new agricultural laws in November of 2020. The protests are currently continuing. The government has introduced new agricultural bills in an attempt to modernise agriculture. The key element of the bills is to remove government minimum price support. This is a system whereby the government sets a minimum price that will be paid for crops when bought off farmers, thereby giving farmers a degree of certainty about their incomes each year. The government wants to remove these minimum price supports, and instead wants farmers to deal directly with companies and corporations to sell their crops.
The government insists that this will allow for greater investment in agriculture and allow farmers to increase their incomes by receiving higher prices for their crops from the agricultural companies.
The farmers in turn argue that without minimum pricing, the corporations will reduce the prices they pay for crops and in turn their incomes will drop, leading to individual farmers having to sell off land to corporations and agricultural companies.
A policeman stands in front of protesters during a nationwide strike called by farmers in Mumbai, India, on December 8, 2020.AFP - INDRANIL MUKHERJEE
But how sustainable are the governments policies:
The governments policies are based on data which states that agriculture in India involves over 50% of the population but contributes only 10% or less of the countries gdp.
50% of population = 10% of gdp
But how will the new farm bills alter this equation in a positive way?
a) Increase the GDP - this will only occur if private sector decides to pay more for the crops that are currently produced which seems very unlikely. The other option would be to change crops to the ones that are most profitable to increase gdp. This has already happened in areas like the Punjab with disastrous consequences - a shift to basmati rice production which is not well suited to the climate has led to severe water depletion. So this is likely to bring only short term benefits. Or could mechanisation increase crop production - but in India farming is already very intensive, mechanisation would make farming more efficient but that is not the same as increasing yields.
b) Decrease the population - decreasing the rural population by a increasing agricultural mechanisation. This would lead to less employment and increase out migration. But to what purpose? Most developed countries have kept about 20% or less of the population in rural areas, so if India followed a similar pattern that would mean:
an additional 300 million + people to move into the urban areas of India.
do the cities of India have the infrastructure to cope with this kind of growth
what are the employment prospects of the new migrants
would an influx of low skilled manual workers improve GDP
does India have the industrial / manufacturing base to provide employment to 300 million