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Indian Farm laws 2020: Neoliberal reforms of the Indian government

The neoliberal reforms of the Indian Government are directing wealth and class power from the economically weaker section to the big corporates.

Edit: I wrote this piece on 13th December 2020. However, it still holds its importance.


This article supports the argument that the neoliberal reforms of the Indian Government are directing wealth and class power from the economically weaker section to the big corporates. To do this, I am primarily taking the example of the three laws passed by the Indian Parliament early in September 2020. I will mainly be referring to the text: “Neoliberalism as Creative Destruction” by David Harvey. (Harvey, 2016)


The three farm laws

The Indian parliament passed the three Farm Bills 2020 in September this year. PM Modi referred to these laws as the “watershed moment in the Indian agriculture history”. He claims that these laws will ensure a complete transformation of the farm sector and empower the farmers. (PTI, 2020) While talking about the reforms, one needs to consider that approximately 60 percent of the Indian population works in the agriculture industry, contributing about 18 percent to India's GDP (Gross Domestic Product). India is the second-largest producer of both rice and wheat across the world. (Statista Research Department, 2020) While India’s GDP shrank by 23.9% during the COVID-19 lockdown since March, agriculture is the only sector to show a growth of 3.4% GVA (Gross Value Added). (Jaiswal, 2020). Here are the brief descriptions of the laws:

Farmers (Empowerment & Protection) Agreement on Price Assurance & Farm Service Act, 2020 – “to provide for a national framework on farming agreements that protects and empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed remunerative price framework in a fair and transparent manner and for matters connected therewith or incidental thereto. (2020)”

Before this, farmers were only allowed to sell their agricultural produce at APMC (Agricultural Produce and Market Committee) market yards of their districts. At these state-regulated markets, buyers and sellers are registered under the law and the transactions are taxable. These commission agents, also known as Arhtiyas would further sell the produce to the consumers.

This law allows farmers to sell their produce anywhere in the country under the concept of “One Nation – One Market”. With this new law, PM Modi’s government has given a nod to a parallel private yard. This private yard does not require either buyer or seller to register with the government. Even the transactions are tax-free. The concept of MSP (Minimum Support Price) is shredded as the government believes that the farmers will get a much higher return for their produce. The government also claims that this law enables farmers to sell their produce directly through the internet and other e-portals.

Farmer's Produce Trade & Commerce (Promotion & Facilitation) Act, 2020 – “to provide for the creation of an ecosystem where the farmers and traders enjoy the freedom of choice relating to sale and purchase of farmers' produce which facilitates remunerative prices through competitive alternative trading channels to promote efficient, transparent and barrier-free inter-State and intra-State trade and commerce of farmers' produce outside the physical premises of markets or deemed markets notified under various State agricultural produce market legislations; to provide a facilitative framework for electronic trading and for matters connected therewith or incidental thereto. (Shri Narendra Singh Tomar, Minister of Agriculture and Farmers Welfare, 2020)

This law enables farmers to get involved in contractual farming. Currently, the government is the largest buyer of the agricultural produce which then further sells the produce to the corporates, except for some crops like sugarcane. PM Modi’s government claims that this law will ensure the price and “futuristic machinery” to farmers even before sowing their crops.

Essential Commodities (Amendment) Act, 2020 – This law amends the 1955 law, which restricted the buyers from storing the produce as it could lead to price inflation. The amendment removes restrictions on stock, movement, and price control of agricultural foodstuffs for attracting private investments in agricultural marketing and infrastructure. (Shri Ram Vilas Paswan, Minister of Consumer Affairs, Food and Public Distribution, 2020)

The government claims that this law will enable the farmers and buyers to store their produce for longer. That will also prevent their produce from getting wasted. The government also looks forward to private investment for storage spaces.


Protests in India

India is currently seeing one of the largest protests in its history since freedom, which could be one of the largest in the world with an upward of 250 million people taking part throughout the country. (Ravi Aggarwal, 2020) However, all of this did not happen overnight. The ordinances were first brought in the union cabinet on June 5, 2020. Farmers of Punjab, a state in North India, had started their objections since then. Farmers of the state registered their protests by burning effigies, multiple tractor rallies, filling the jails, and stopping national trains amidst the global pandemic. Ignoring the protests, the parliament passed the ordinances in September unconstitutionally without a discussion or a physical vote. Noteworthy, that agricultural laws fall under the state list and not under the central list. Then, why, and how did the government trespass their decision sphere? (P. Chidambaram, 2020)

India is currently seeing one of the largest protests in its history since freedom, which could be one of the largest in the world with an upward of 250 million people taking part throughout the country.

Seeing minimum to no response from PM Modi’s government, farmer unions gave the slogan of “Delhi Chalo”, an indefinite migration towards Delhi. The protest got national attention when protesting farmers were welcomed to the capital city with barbed wires, water cannons, tear gas, and baton charge. (Jagga, 2020) PM Modi’s government and BJP ministers justified their unconstitutional acts by referring to ordinances against mass gatherings to stop the spread of COVID-19 while they have been holding political rallies without a miss since March.


Role of neoliberal reforms

David Harvey defines Neoliberalism as “a theory of political economic practices proposing that human well-being can best be advanced by the maximization of entrepreneurial freedoms within an institutional framework characterized by private property rights, individual liberty, unencumbered markets, and free trade. The role of the state is to create and preserve an institutional framework appropriate to such practices.” He further adds that “if markets do not exist (in areas such as education, health care, social security, or environmental pollution), then they must be created, by state action if necessary.” (Harvey, 2016)

India’s constitution has adopted a welfare state model of governance. It has played an active role in distributing and producing resources within the country. This means that it takes a long time to start a business in a country like India. Keeping this in consideration, PM Modi’s government follows the concept of “Minimum Government, Maximum Governance,” Principally, it means that the government reduces the number of ministries, outsources the production and supply of the government services to the private sector and lastly, reducing the initiatives that the government must not be involved in. (Kagde, 2015)

One major reason for the current protests is that the government has taken away the safety net of farmers. A private yard with no taxes or registration means that it is going to destroy the current existing APMC yards. This means that farmers would no longer be aware of the worth of their produce.

Harvey describes privatization as “the corporatization, commodification, and privatization of hitherto public assets.” India saw its first wave of liberalization after the economic crisis in 1991. Many market restrictions were eased which had been put into place after Independence. It may be surprising that farmers were not allowed to sell their produce in an open market then and until now. The restrictions were placed to protect farmers from the middlemen cartels. A price floor is in place at these government regulated yards to ensure that the prices do not get too low. Otherwise, these cartels would come with a much lower market price. (Explained Desk, 2020) These APMC yards also tell the worth of produce to the farmers, so that even if they are selling the produce on a personal level, they are aware of the prices.

If there is a dispute between the buyer and the farmer, the highest authority that the farmer can go to is the local government-appointed official.

The description of the law claims that this is done to “protect and empower” farmers. PM Modi in his speech also claims that these laws will “liberate farmers from the “tyranny” of the middlemen”. However, the laws signal otherwise. It Is inaccurate to assume that the payments are made upfront to the farmers (sellers) in the agricultural sector, like other sectors. If there is a dispute between the buyer and the farmer, the highest authority that the farmer can go to is the local government-appointed official. The bar council India calls it unconstitutional as the right to go to the court is taken away from the farmer. Amidst privatization of agriculture, this law is trying to protect the buyer over the farmer.

In 2019, PepsiCo sued each farmer with $143,000 because they were violating their rights to the quality of the potato. Who has the bargaining power really – the farmer or the multi-millionaire corporates?

The description of the second law mentions “freedom of choice” while talking about contract farming. Here, the freedom of choice refers to free movement and bargaining power in the hands of the farmer. However, a ground reality says otherwise. 86% of the farmers in India own a marginalized land. (2020) Contract farming has already been happening for limited crops in Punjab India. In 2019, PepsiCo sued each farmer with $143,000 because they were violating their rights to the quality of the potato. The company also suggested an alternative settlement to this payment by signing their authorized cultivation program. (Gibson, 2019) If the current farm laws were in place, the farmers were barred from reaching out to the courts for help. Then, who has the bargaining power really – the farmer or the multi-millionaire corporates?

On February 5, 2020, Reliance Industries launched their first app in the agriculture sector way before the ordinances were announced publicly. The app claims to “enable farmers for data driven decisions.” The app was also able to secure its $5.6 Billion funding from Facebook on April 22, 2020, itself. Subsequently, Facebook also got approval to WhatsApp payments in India. It implies that the billion-dollar corporates were aware of the ordinances even before they were publicly brought into the parliament for the farmers.

Karl Marx in “So-Called Primitive Accumulation” mentions that the process of enclosures happens by separating the people from the means of production. Once they become “free labor,” it is then that the industrialists accumulate money. (Marx, 1867) The second law suggests that the disputes can be settled under the Land Revenue Act i.e., selling your property to pay the dues. Well, Marx would agree that the state has fueled this transition of capital accumulation and the big powerful corporates are in the center. The farmer will be forced to sell their lands to the big corporates or get in contract with them on their terms if they do not produce the quality that the corporate demands.

MoU of State Bank of India with Adani group for $1 Billion loan is another widely criticized decision. Adani Group plans to use this money for the largest coal mining project in world history.

Harvey defines the element of financialization in neoliberalism as the speculative and predatory style of financial system that becomes the main centre for political agendas and policy decisions. (Harvey, 2016) The infamous decision of PM Modi’s government to demonetize the currency notes is not hidden from anyone. MoU of State Bank of India with Adani group for $1 Billion loan is another widely criticized decision. Adani Group plans to use this money for the largest coal mining project in world history. PM Modi’s government checks all the boxes for valuing financialization over the common public good.

Privatizing agriculture with minimum interference from the government Is further going to increase the divide of the rich and the poor. Some states of India have already fully or partially implemented the laws. The data from these states do not back up the speculative benefit of financialization of the sector. The state of Bihar had abolished the Agriculture Produce Marketing Committee (APMC) Act in 2006. As per the data from 2013, Punjab farmers earned the highest of ₹ 2,16,708 while those in Bihar earned only ₹ 42,684 which is five times more than the later. Since then, the farmers of Bihar are forced to migrate to Punjab and work as “free labor”. (Singh, 2020)

As Harvey points out that neoliberalism is an enormous success from the standpoint of the upper-class, it is true in India’s case as well. (Harvey, 2016) Amidst economic slowdown in 2019, India added three billionaires each month. Mr. Mukesh Ambani, the owner of the Reliance Industries, has jumped from being the 40th richest man in the world to 4th richest man in the list during PM Modi’s regime. (Kant Ravi, 2020) In the purview of the class divide, the mainstream media is favoring the side of the ruling elite. Upsettingly, the media is questioning the credibility of the farmers from their clothing and knowledge of English.

Why were the ordinances rushed to pass amidst a global pandemic? The answer lies in “the management and manipulation of crisis.” During the COVID-19 pandemic, Lok Sabha of the Indian parliament passed a record 25 bills in the session of ten days. This gives a productivity rate of 167% to the members between 14th September 2020 and 23rd September 2020. (OP India staff, 2020) With the lockdown in place, PM Modi’s government could prevent people from protesting these significant bills. The hypocrisy of the ruling party is out there in the open. The government kept doing their political rallies during the lockdown. At the same time, the government cited COVID-19 spread to justify their unconstitutional methods to stop the peaceful protests.

Harvey explains state redistributions as “The state, once transformed into a neoliberal set of institutions, becomes a prime agent of redistributive policies, reversing the flow from upper to lower classes that had been implemented during the preceding social democratic era.” (Harvey, 2016) As per the census of 2011, 2/3rd of India lives in rural areas. India’s agricultural sector employs nearly half of the workforce and accounts for 16% GDP as mentioned above. With shrinking support of the governments since 1995, India has had over 300,000 farmer suicides until today. (Sindwani, 2019) Farmers are under distress and forced to go to the cities and work as migrant laborers. The industrialists then treat these surplus migrant laborers inhumanely for capital accumulation. The life of this “free labor” is nothing more than a commodity as seen during the early stages of the lockdown. Laborers were not allowed to go home, beaten for violating the gathering policies and put into makeshift jails without food and sanitation. One can infer that the decisions were taken to support the benefits of the industrialists and not for the much wider population of migrant workers.

Reliance Jio not only killed other corporate players but also killed the government run – BSNL. It is interesting to note that Jio is the largest user of state run BSNL and MTNL towers in rural and urban areas. Why did the government let that happen?

To understand how these farm laws can be a prime example of state redistribution, one needs to be aware of another example of the Telecom sector in India. Reliance Jio telecom was soft launched in 2015. With the lack of MSP in the sector, the corporation pumped in massive amounts of money to make it easily affordable to every household. Jio offered their unlimited internet and calls services almost free to their consumers. It not only killed other corporate players but also killed the government run – BSNL. It is interesting to note that Jio is the largest user of state run BSNL and MTNL towers in rural and urban areas. (PTI, 2019) Currently Jio has monopolized the market and has the second largest customer base in India. They have subsequently increased their prices in mere 5 years to finally churn profits. In a country where India’s richest 1% hold 40% of the wealth and richest 10% hold 74.3% of the wealth (IANS, 2020), PM Modi talks of 5G connectivity and a high-speed fiber optic connectivity as the need of the hour. (Nandi, 2020) Inarguably, PM Modi’s government gave powers to their private telecom competitor and redistributed the social and economic power, which was once owned by the public sector.

In the absence of the government regulation in the agriculture sector, farmers are afraid of similar results. The concern is that in a similar pattern, big corporates are going to monopolize the industry and kill the government-run entity, in this case, the APMCs. 5 years later, Big corporates like Jio would have had their foothold in the sector with the help of state redistribution.


Conclusion

Undisputedly, the neoliberal reforms in the farm laws 2020 favor the corporates and the buyers. There is little to no evidence that these reforms favor the farmers at all. Ever since coming into power, PM Modi’s government has privatized not just loss-making, but also, profit-making sectors and entities of the government. In a move towards the neoliberal system, people’s choices, class and power structures, division of labor and hierarchy between job roles have shifted drastically. The class divide is visible more than ever – government policies that are looking away from the poor and marginalized are a witness.

The pride of PM Modi’s government lies in taking drastic decisions to shock the system. These decisions are taken with minimum consultation from the opposition parties. Although the government claims to be the people’s government, there is little to no evidence of a welfare state. Citing the evidence above, the Indian government ticks all the elements of neoliberalism. However, the government is not a champion of the free market. Policies and laws are inarguably in favor of the big corporates who usually happen to be PM Modi’s or his government’s friends.

Today marks one year to a nationwide Anti-CAA (Citizenship Amendment Act) protest against the government. On the anniversary, stands another protest hitting hard on the ego of the government. As protestors are used to the maligning and deviating tactics of the elite narrative of the government and its controlled media, there is much better preparation and a foothold. As a result, the government has had to listen to the voice of the protesting farmers. This is also the first time under PM Modi’s regime that the protests are called not just against the government, but also against Mr. Ambani and Mr. Adani, the two multi-billionaires. It is citizens and the government who are in a clash against each other. These protests are a result of the fact that citizens of India are noticing a state action to imbalance the class power.

 

References


Explained Desk. (2020). Quixplained: What is MSP and how is it determined? Retrieved from https://indianexpress.com/article/explained/minimum-support-price-msp-farmers-explained-6706253/

The farmers (empowerment and protection) agreement on price assurance and farm services bill, 2020, (2020). Retrieved from http://164.100.47.4/BillsTexts/LSBillTexts/PassedLoksabha/Bill%20Farmers%20%20Empowermente%20(As%20passed_Eng).pdf

Gibson, K. (2019). Pepsi withdraws lawsuit against indian farmers over potato used in lay's chips. Retrieved from https://www.cbsnews.com/news/pepsico-withdraws-lawsuit-against-potato-farmers-in-india/

Harvey, D. (2016). Neoliberalism as creative destruction. The Annals of the American Academy of Political and Social Science, 610(1), 21-44. doi:10.1177/0002716206296780

IANS. (2020). India's richest 1% holds over 40% of national wealth: Report. Retrieved from https://www.livemint.com/news/india/india-s-richest-1-holds-over-40-of-national-wealth-report-11579534691272.html

Kant Ravi. (2020). The rise of the monopolists in modi’s india. Retrieved from https://asiatimes.com/2020/10/the-rise-of-the-monopolists-in-modis-india/

Marx, K. (1867). Chapter twenty-six: So-called primitive accumulation. Capital vol one, part VIII ()

Nandi, S. (2020). PM modi stresses on need to ensure timely rollout of 5G to empower millions. Retrieved from https://www.livemint.com/news/india/pm-modi-stresses-on-need-to-ensure-timely-rollout-of-5g-to-empower-millions-11607407333906.html

OP India staff. (2020). Parliament sees its most productive session: Here is a summary of all the 25 bills passed by the modi government in lok sabha. Retrieved from https://www.opindia.com/2020/09/summary-25-bills-passed-modi-government-lok-sabha-monsoon-session/

P. Chidambaram. (2020). Farm laws — not choice, just noise. Retrieved from https://indianexpress.com/article/explained/an-expert-explains-farm-acts-and-federalism-6622769/

PTI. (2019). Jio is biggest mobile tower customer of BSNL, MTNL. Retrieved from https://telecom.economictimes.indiatimes.com/news/jio-is-biggest-mobile-tower-customer-of-bsnl-mtnl/70362943

PTI. (2020). Watershed moment for indian agriculture: PM modi on farm bills. Retrieved from https://www.onmanorama.com/news/nation/2020/09/20/prime-minister-narendra-modi-agriculture-farm-bill.html

Ravi Aggarwal. (2020). Why india’s farmers are protesting. Retrieved from https://foreignpolicy.com/2020/12/10/india-witnessing-biggest-protests-history-modi-farm-reform/

the farmers’ produce trade and commerce (promotion and facilitation) bill, 2020, (2020). Retrieved from http://164.100.47.4/BillsTexts/LSBillTexts/Asintroduced/113_2020_LS_Eng.pdf

The essential commodities (amendment) bill, 2020, (2020). Retrieved from http://164.100.47.4/BillsTexts/LSBillTexts/Asintroduced/111_2020_LS_Eng.pdf

Sindwani, P. (2019). India’s budget allocation for agriculture remains unchanged at ₹1.3 trillion. Retrieved from https://www.businessinsider.in/indias-budget-allocation-for-agriculture-remains-unchanged-at-1-3-trillion/articleshow/70054131.cms

Singh, D. S. (2020). Why punjab should not go the bihar way on agricultural reforms. Retrieved from https://www.hindustantimes.com/opinion/why-punjab-should-not-go-the-bihar-way-on-agriculture-reforms/story-hswbTv848qRBr8F0YysuMI.html


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