Thousands of Indian farmers Continues to protest and demand legislation that guarantees minimum crop prices for their crops, reinvigorating a 2020 debate that led the country to repeal several farm laws that farmer unions deemed hostile to their livelihoods.
At the center of the protesters’ long list of demands is the push enshrine in law a minimum support price (MSP), a cornerstone of the Indian economy in which the federal government recommends minimum prices in an effort to safeguard profit. It currently has a consultative and non-binding nature. The protesters – who the government has tried to thwart with shows of force, restrictions on the right to assembly and online censorship – are also urging lawmakers to extend the MSP t.or all crops, not just those deemed essential.
But while Indian farmers are legitimately struggling, their demands are divorced from some unfortunate economic realities.
From August 2020 to December 2021, India’s central government faced a coalition of farmer unions, mostly from the state of Punjab, over three disputes agricultural invoices, drawn up with the aim of reform and modernization of the agricultural market. The bills would have largely taken steps to reduce government intervention in India’s agricultural sector, which, as of 2022, composes 43% of the Indian workforce. Basically, farm bills targeted make it easier for customers and contractors to purchase directly from manufacturers, rather than through a public mechanism.
Many farmers feared that these laws would eliminate MSP and that the modernization of agriculture would allow companies to control their livelihoods. Hundreds of thousands of farmers participated in demonstrations involving sit-ins, traffic obstructions and even suicides. Amid continued pressure, the bills were eventually repealed.
Narendra Modi, the Indian Prime Minister, was standing from the invoices but apologized for failing to convince farmers of their usefulness. “Everything I did was for farmers,” Modi She said in a statement. “What I’m doing is for the country.”
But as the debate over market reform intensifies, one important point flies under the radar: Despite employing nearly half of the country’s workforce, India’s agriculture sector, the largest fastest growing The G20 economy has contributed steadily less than 20 percent of the nation’s gross domestic product (GDP) since 2002. Although India’s economy has expanded rapidly, many farmers have resisted changing occupations and some have struggled to afford educational opportunities, leaving the profession oversaturated and other labor markets undersaturated.
It gets worse: Although its agricultural industry is full of labor, India is ranked 111th in the world Global Hunger Index 2023. The country’s public distribution system, which primarily supports the MSP, has been unable to efficiently distribute food and is full of corruptionundermining the very reason for its existence.
Many farmers in India produce low yields due circumstances mostly out of their control: unreliable weather conditions, lack of diversity in crops, poor infrastructure, growing farmer debts and antiquated agricultural practices. To put it plainly, Indian farmers rely on government aid because agriculture is simply not a sustainable market in the country. Signing the MSP into law would officially subsidize a struggling, overcrowded industry with no end in sight.
The farmers’ other demands include the abolition of a 2020 law that left room for private investment in electricity and withdrawal from free-market agreements with the World Trade Organization. It is increasingly clear that farmers’ demands, while coming from a place of real suffering, are fundamentally opposed to any semblance of a free market.
It’s not a secret. The New York Times explicitly refering to MSP as “social insurance”, while a BBC item he said the farm bills would loosen laws that “have protected farmers from the free market for decades.”
In February, the government had offered a five-year plan to ensure income from some crops through MSP, but it was not enough. The farmers refused. “After discussion in both forums, it was decided that if you analyze it, there is nothing in the government’s proposal,” She said Jagjit Singh Dallewal, one of the major leaders of the protest. “This is not in favor of farmers.”
But contrary to Dallewal, it is highly questionable that MSP, introduced in the 1960s to address food shortages, is helping farmers as a result. “The currently implemented MSP may not play a significant role in reducing market volatility in agricultural commodity prices,” second to an analysis by researchers at the University of Illinois at Urbana-Champaign. “If MSP does not significantly reduce price volatility, the benefits of the MSP program to farmers are unclear.”
There is little to gain and much to lose when you consider that government purchasing crops at fixed rates cannot provide farmers with a long-term solution to their practical poverty. Those much-maligned erstwhile farm bills would take conservative steps towards liberalizing India’s agricultural economy. Passing MSP into law, on the other hand, would represent a huge step backwards for one of the world’s major growing economies.