DM Monitoring
If you’ve been watching the news or even just following Rihanna on Twitter you’re likely to know that protests of unprecedented scope at least one may have been the largest in modern history and duration are raging across India. Although they are being called the “farmer protests,” the collective protest by millions of Indians cutting across religion, caste and income lines is about much more than any agriculture legislation. It is a coming together of desperate people to resist being subjected by their government to increased economic vulnerability.In India, millions of farmers are protesting to overturn three new agriculture laws the government says are designed to reform India’s agricultural sector to make it less state-controlled and more market-based what economists call liberalizing the sector.
The need for reforms is urgent, and farmers themselves would generally agree that change is sorely needed. My 14 years of development economics work in rural India have shown that farmers face crushing debt, unsustainable groundwater depletion and an epidemic of suicides. So why, then, are they protesting their own deliverance?
Well, as farmers and many small-business people all over the world know, rapid economic liberalization of a sector doesn’t guarantee free markets or efficiency, let alone any farmer’s livelihood. And it is at least as unlikely in this case as anywhere else both because of the specifics of these laws and because of how the economy works in India.
For instance, the new laws completely lack the obvious safeguards that should accompany any massive deregulation, including a regulatory framework or safety nets to protect growers against market volatility. Previous government commissions have consistently recommended such measures. Their lack is puzzling if the government is serious about pursuing economic growth in a way that allows smallholder farmers to benefit from it.
Farmers’ fears that these laws leave them vulnerable to exploitation weren’t assuaged by many of the other provisions. For example, one of the laws prevents farmers from being able to take companies to court if they violate contracts to buy farmers’ products in any way. That this provision was ever included is impossible to defend, and it raises understandable concerns about intent.
It’s also important to understand the broader economic picture for the farmers (and everyone else in India). In India, monopoly power is commonplace.
For example, in one-third of industries, a single company often controls over 50 percent of sales. A mere 20 companies account for 70 percent of all corporate earnings in India (compared to 25 percent in the U.S.).
