Learning from Farm Laws Fiasco – UPSC GS2

Context: The enactment of farm laws, sustained farmer protests against them over the year and the eventual repeal has many takeaways for the future policymakers.
Lessons from the farm law fiasco:
  • Push for simultaneous elections: There is an inherent mismatch between politics and economics. A reformer seeks long-term prosperity, while a politician’s survival depends on the next election. Clearly, the rollback of the farm laws was influenced by elections in UP and Punjab. The problem, however, is that India is perennially in election mode. Hence, the first lesson is to push for simultaneous elections.
  • Get states to enact laws (not the Centre) on state or concurrent list. Govt should have encouraged other states to implement the reform. Once farmers of Punjab and Haryana would see farmers’ incomes rising in the neighbouring states, they would’ve realised the benefits of the laws. This happened with VAT in 2005. When some states refused to implement it, the government allowed them to move at their own pace. Within 18 months, all states fell in line. Learning from GST Council’s success, the PM should employ the National Development Council of CMs to push the reforms.
  • Sell the reforms to the public: Margaret Thatcher, the legendary reformer, used to say, “I spend 20% of my time doing the reforms and 80% selling them.” India still reforms by stealth. People still cannot distinguish between being pro-market and pro-business. Even a reform with obvious benefits needs explaining. Far-reaching reforms need to be sold.
  • Reforms require consent of the governed in a democracy. The process of reforming is equally important. The farm laws were introduced as ordinances, then converted to bills in Parliament and passed by a brute majority without debate. They escaped the normal process of deliberation in the standing committee. This was a mistake.
  • Reformers need to take a holistic view. The Indian farmer is poor because there are too many people working on the farm. Our only hope is large-scale expansion of low-tech manufacturing to absorb this surplus labour. The farm laws would have provided breathing time for the economy to create these jobs. If this had been explained to farmers, it would have given credibility to the reforms.
  • Reforms will hurt few in the short term: Reforms often hurt a small minority while helping the large majority. If the minority is well organised, it can derail the reform. The cartel of arhtiyas who stood to lose when the farmer got the freedom to sell outside the mandi funded the protests. Reformers in future need to incentivise and look after those who lose out.
  • Timing of the reforms: It is easier to do reforms during a crisis when people are more accepting of sacrifice and radical action. The 1991 reforms went through because the nation was bankrupt. Similarly, it was smart for the govt to embark on agricultural reform during the Covid crisis. Thus, the timing of the farm laws was not wrong, as many critics have alleged.