When the establishment ignores the historical context and the emotional component underlying any debate, mass protests can erupt to potentially shape the future. The people of Punjab would not have wanted a confrontation with the Union government, neither would I want to put it so bluntly, but around us, agitated farmers, women and men, more young than old, with a strong common purpose, are energised in a way not seen in many decades. To nullify the possible impact of the three farm acts passed in haste by the Parliament, the Punjab government was compelled to pass its own bills on Tuesday. These broadly attempt to ensure continued procurement of wheat and paddy at the minimum support price (MSP), uphold the powers of the courts in dispute settlement and empower the state to regulate trade of foodgrain.
The crux of the agitation is that the three farm acts were preceded by a high-level committee in 2015, headed by Shanta Kumar, a former BJP chief minister, which had suggested measures to reorient the Food Corporation of India (FCI)’s operations by shifting away from the public distribution system to cash transfers. This negates the very requirement of MSP procurement. The Commission for Agricultural Costs and Prices has been recommending reviewing the open-ended procurement of foodgrain, which is also reflected in the recent RBI annual report that says that the MSP is no solution to farmer’s woes. Similar views were expressed by a Union cabinet minister lately. Therefore, the farmers infer that a path that makes MSP procurement redundant is inevitable and fear it will become applicable after the assembly elections in 2022. To grasp the farmer’s resentment, I estimate the likely loss that may accrue to Punjab in the most probable way.
The MSP for wheat is Rs 1,925, and for paddy Rs 1,868. But in the absence of government procurement in Bihar and other places, normally crops sell 20 per cent below MSP. Similarly, without assured procurement in Punjab, the losses to the state could exceed Rs 15,000 crore. This generated such intense an outcry that even BJP allies had to go to the extent of breaking long-forged alliances for fear of becoming politically irrelevant. Though it is more likely that the open-ended procurement of wheat and paddy will end.
In other states, procurement per farmer is capped at produce from 5 acres of land. For example, in Rajasthan, it is 25 quintals for moong and groundnut. Eventually, farmers fear that the same limits will be applied in Punjab; then about 20 per cent of paddy and 25 per cent of wheat will not be procured and will sell below the MSP. This will amount to a loss of Rs 3,200 crore.
Possibly, that is why central government functionaries have often repeated that “MSP will continue” rather than clarifying that “procurement at MSP will continue as earlier”. To give them credit, their “truth” corresponds to Yudhishthira’s “untruth” when he stated, “Ashwatthama is dead”. This adds fuel to the fire because the statement hides more than it reveals.
In adjoining states, central government agencies do not pay mandi fee on procurement. The new farm bills disallow imposition of mandi fee on farm produce procured outside the mandi’s physical boundaries. Should FCI or private traders trade outside the mandi space, the state will lose revenue of Rs 3,500 crore.
Central government agencies do not pay commission to arthias in their price support operations for oilseeds, pulses and cotton. If this practice is extended to Punjab, three-quarters of 24,000 arthias and their employees will lose agency and employment. The annual loss will be about Rs 1,500 crore. Further, in the event of not being paid by the purchaser, they will start charging farmers extra fee under various pretexts.
After reneging on the promise of fixing the MSP by the C2+50 per cent formula, the government settled on the (A2+FL)+50 per cent formula where the derived MSP is far less. There are rumours that to stave off a financial crisis, MSP in the future will be calculated separately for each state depending on their cost of cultivation. If true, in Punjab, the MSP for wheat and paddy will reduce to Rs 1,035 and Rs 1,094 per quintal respectively — the loss could be more than Rs 26,000 crore.
An opportunity has been lost in the lackadaisical handling of the issue, and a situation of civil unrest has been created. Politics now threatens to complicate the process. I doubt if future historians will recall when Punjab changed course, and how an issue of farmer livelihoods morphed into one of Punjab’s survival. It is time to stop moralising. As they say in theatre, “if we want a happy ending, it depends where we stop the story”. That time is now.
