farm laws roll back: Farm laws roll back is a defeat for economic sense and a victory for undeserving vote banks- PM Modi has withdrawn his proposed agriculture reform laws due to over a year-long agrarian agitation around Delhi.

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farm laws roll back: Farm laws roll back is a defeat for economic sense and a victory for undeserving vote banks- PM Modi has withdrawn his proposed agriculture reform laws due to over a year-long agrarian agitation around Delhi.


  • Modi’s reforms were the first step towards a new system
  • Withdrawal on agricultural laws will also raise doubts on other reforms
  • Loss of economic understanding, victory of ineligible vote bank

New Delhi
Withdrawal of three new agricultural laws is a defeat of economic understanding and victory of unqualified vote bank. Prime Minister Narendra Modi, whom critics accuse of being an autocratic ruler, has withdrawn his proposed agrarian reform laws due to over a year-long agrarian agitation around Delhi. He prefers surrender rather than a possible vote defeat in the impending state elections in Uttar Pradesh and Punjab. It is a step back from what was once only the first step towards difficult but necessary reform.

The current system of highly subsidized agriculture leads to high wheat surpluses at prices higher than the global price. Hence large scale unwanted stock is neither consumed nor exported. Free electricity has encouraged over-pumping and cultivation of water-intensive crops, leading to a steady decline in groundwater levels. The rice-wheat rotation has encouraged the burning of paddy straw by farmers, which affects and kills thousands of people through smoke pollution. Modi’s reforms were the first step towards a new system. Whatever his shortcomings were, he was supported by respected agricultural organizations such as the Shetkari Sangathan in Maharashtra and the Confederation of Indian Farm Associations in Andhra Pradesh. But they will not vote in the upcoming state elections, and hence the farmers of the North-West have won.

Will Modi be a serious reformer in the second term as well?
Now the question arises whether Modi will be a serious reformer in his second term as well? In his first term he was an incremental reformer, focusing on improving the welfare programs launched by Congress and renaming them as Swachh Bharat, Jan Dhan Yojana, Pradhan Mantri Awas Yojana etc. He started in 2014 by proposing radical changes in land acquisition to speed up projects, but was accused of helping big business at the expense of poor farmers. After not getting a majority in the Rajya Sabha and facing defeat in the impending state elections, he backed out.

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But with almost a majority in the Rajya Sabha after winning a second term in an emphatic fashion, his second term promised radical measures. These include privatization of all except a limited number of PSUs; National Monetization Pipeline involving sale of old infrastructure (ports, roads) to raise Rs 6 lakh crore to finance new infrastructure; Repairing the power sector plagued by heavy losses due to corrupt, politically run state-run power distribution companies; Overhauling of the financial sector (including privatization of several banks) to eliminate the curse of high bad loans; and includes large-scale initiatives in renewable energy.

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Now doubts will also arise on other reforms
Backtracking on agricultural laws will cast doubt on other reforms as well. Many of them will also suffer loss of votes. Anti-reform groups within the BJP such as the Swadeshi Jagran Manch and the Bharatiya Mazdoor Sangh were sidelined by Modi after his 2019 election victory. Now they will get the courage to protest from within.

Status of target for reforms in the power sector
Several expert committees and political leaders have concluded that the power sector cannot be made viable without the privatization of distribution companies. Most of the power distribution companies are government owned. The Union Power Ministry has also prepared a standard bidding document for privatization. But in Uttar Pradesh, in an attempt to privatize, electricity workers threatened an indefinite strike. The state government backtracked and started talks with trade unions to improve the pathetic performance of the distribution companies. Anyone think this would work?

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If power reform fails in a state where the BJP has an overwhelming majority, can it be done elsewhere? If power distribution companies remain in dire straits and cannot pay suppliers, what will happen to future electricity generation and climate pledges that invest massively in renewable energy? Will the investors invest the necessary trillions if the power distribution companies, which are said to be the buyers of electricity, remain in disarray and are unable to pay the dues?

Proposal for comprehensive privatization of PSUs
Modi proposed massive privatization of PSUs. This will certainly provide funding for the government’s vision of a massive new network of expressways, pipelines, waterways and high-speed trains. But every privatization will increase the resistance of the trade unions, in which the opposition parties will bake bread, just like in the agricultural movement. The privatization plan is to achieve the trillions of rupees in revenue required for the ambitious plans. If electoral considerations force Modi to stop privatization, how will he bridge the financial gap?

What could be the worst consequence of backtracking on agricultural laws?
Even before the Kovid disaster, GDP growth was slow. It peaked at 8.3% in 2016-17 and then declined to 7.1%, 6.1% and 4.2% in the next three years. This indicated the need for further economic reforms to improve efficiency and productivity, which is now in doubt. Modi’s critics will rejoice at his restlessness. But the failure on the economic front will encourage the party’s most radical Hindutva factions. They can argue that the best winning issue is communal polarization and tension. This would be the worst result of surrender to the agrarian agitators.

Why do farmers want guarantee of MSP or Minimum Support Price, what is MSP?

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