In 2019, over 10,000 Indian farmers took their lives out of desperation and as a means of relief in the face of crippling debt. The plight of farmers demonstrates the need for reform in the agricultural sector. That plight is what the Indian Farm Acts aims to address by expanding the market for agricultural produce. The Indian government should not pretend that the Indian Farm Acts are a panacea to the longstanding issues that affect Indian farmers, particularly since they fail to address environmental issues like arid farmland and lack of access to water. If implemented with care and concern for farmers, these laws could be the first step to addressing farmer poverty. Ultimately, the Indian Farm Acts will likely not be beneficial to farmers or overall economic growth in India.
The central and state governments have long subsidized many aspects of farmers’ lives, most of whom lead subsistence-level lives farming on small family plots. Currently, farmers sell their produce under a minimum support price or “mandi” system. The mandi system reassures farmers that their products will sell at least the price floor. However, the mandi system is plagued by a lack of transparency that leads to the exploitation of farmers by middlemen. Many farmers are also worried that moving away from the mandi system will eventually eradicate the minimum support price and leave them with no guaranteed buyer.
The Indian Farm Acts will expand the agricultural market from a single-buyer, monopsonistic model to a model that allows for interstate trade and the involvement of private corporations. Farmers will be able to sell their produce at highly competitive prices, and thus make more profits without relying entirely on the government. Additionally, opening up the agricultural market to private firms will also reduce government spending on farmers, cuts out middlemen integral to the mandi system, and incentivizes farmers to partner with agribusiness to invest in technology to maximize output, hypothetically increasing profits for farmers.
This radical shift is not without its drawbacks. Moving away from the mandi system and towards the free market will not eliminate farmer exploitation. Private corporations are not interested in the fair compensation of farmers’ labor but rather, purchasing goods at the lowest possible price. This, coupled with the fact that farmers will be at a disadvantage when negotiating competitive contracts with private companies, will likely lead to massive corporate exploitation of already suffering farmers. Similar laws have been implemented at a state level in states like Bihar, where despite growth in agricultural output, farmers do not realize these profits as most of them continue to go through middlemen who sell their produce below the previous minimum support price.
These laws are characteristic of the Modi administration’s penchant for large-scale reforms with little regard to their ripple effects on society. While it is clear that the current system needs reform, it is also clear that the new system implemented by the Indian Farm Acts will do little to amend the issues that farmers face under the mandi system. Based on the evidence, the Indian Farm Acts will offer moderate economic benefits while leaving farmers’ lives unchanged.