In September 2020, India’s Prime Minister Narendra Modi implemented a series of farming laws aimed at loosening the government’s protective role in selling agricultural products. Instead of assisting the farms and their workers, who make up at least 58% of the workforce, the laws left farms with fewer profits. After months of protests, in the final days of November 2021, the Indian government made the decision to repeal India’s detrimental farming laws, causing farmers across India to rejoice.
Farming in India
India’s farming industry employs one of the largest agricultural workforces in the world and stands as one of India’s greatest providers of economic income. Rice alone earns the nation $8.82 billion, as reported at the end of the fiscal year 2020. According to World Bank data, “agriculture, forestry and fishing” contribute 18.3% to India’s overall GDP.
Small-scale farmers are vulnerable to “many production risks like drought, floods [and crop failure].” In addition, these small-scale farmers’ incomes are also vulnerable to market risks, such as “poor price realization” and an “absence of market.”
From July 2018 to July 2019, Indian farmers’ average income per month was ₹10,218 or approximately $135. This amount monthly means farmers can earn around $1,600 annually, with a margin for error to account for the received income in trades. This figure is the total of all earnings plus expenses.
India’s extreme poverty rate stands at about 7%, however, certain states, usually rural areas, face disproportionately high rates of poverty. For example, in Bihar, one of the most agriculture-dense states, poverty rates are the highest. Estimates indicate that 770 million Indian citizens are impoverished and live in rural areas where the farming laws had the most impact.
Impacts of India’s Detrimental Farming Laws
Modi’s intention was for the laws to allow farmers, specifically those working the smaller farms, to increase earnings by taking away government regulations and allowing easier access to business dealings with private businesses. The government wanted farms to increase dealings with private companies because most private businesses can pay higher rates and the government was willing to guarantee minimum prices. It may not have been the government’s intention, but the Indian government’s three new laws minimized profits for India’s farms in significant ways.
The three bills seem relatively straightforward but do not promise any immediate assistance or an apparent increase in income for farmers. One of the major changes promised was the ability for farmers to sell their products to any private organization. However, the laws did not enforce or extend the Minimum Sales Price (MSP) to those industries.
Before the changes, the MSP was guaranteed for many products from which the farmers often made their highest income. The MSP was the assured price for farmers when selling specific types of products directly to the government. Without the extension of the MSP, the power went to the private businesses. Still, the privatized businesses could buy the products for less than the products’ worth, dramatically undercutting the farmers’ income.
The major secondary change put more power into the hands of the consumers and buyers than into the hands of the farmers. This change left the farmers unable to alter contracts or expand on their average income from the private companies. The government did not repeal the MSP but limited how much it would buy from the small farms to encourage outside sales. At the very least, the farmers demanded a promise of the MSP. Without the MSP, the farmers knew they would lose significant income.
The Road Ahead
Now that the Indian government has chosen to repeal India’s detrimental farming laws, farmers are jubilant. The laws’ repeal passed through both Upper and Lower Parliament, and in doing so, has guaranteed the farmers the freedom to, at the very least, earn the MSPs.
Repealing the laws will have future implications for farmers and their demands of the government. During the year of protests, the farmers learned the extent of their political powers. The farmers account for more than 50% of the workforce and are one of the largest voting blocs in India. After their victory through protest, India’s farmers have become aware of their power and admit their plans to continue protests to place MSPs on other farming products.
India’s farming laws, including those repealed, do not include MSPs for products such as rice or wheat, which are the small farms’ most common and significant creators of income. MSPs on rice and wheat, and hopefully all produce, can significantly increase the average farm income, potentially lifting many farmers and farming communities out of poverty. The power is now back in the hands of Indian farmers and farmers are determined to make the most of it.
– Clara Mulvihill