Second shot: Could cooperative federalism revive Indian farm reforms?
Subscribe to enjoy similar stories. India’s farm sector has long been bonded to the state. The supply of major crops is responsive not to price signals that reflect actual demand, but mostly to minimum support prices (MSPs) set by the government, which is widely seen by farmers as their buyer of first and last resort.
To reduce the state’s role, enable private procurement of farm produce and grant market forces more space to shape outcomes, the Centre enacted a trio of laws in 2020, but only to roll them back in the face of farmer resistance. The first law would have let farmers sell their harvest anywhere, not just at state-regulated wholesale mandis under Agricultural Produce Market Committees (APMCs). With the monopoly of local intermediaries gone, direct buyer-seller deals would have meant efficient price discovery (at least on paper), and the rise of national markets for each crop.
The second law, by lifting movement and storage curbs on cereals, pulses, onions, potatoes and other essentials, would have acted in conjunction with the first. The third law laid out a legal framework for contract farming, so that farmers could strike deals with food processors and other private procurers. But then, rumours of state procurement being axed for farmers to be put at the mercy of private bullies got in their way, and all three enactments were repealed in November 2021.
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