The larger context of agrarian issues & a plausible solution.

The existing impasse around the farmers’ protest against the farm laws continues in spite of the intervention by the Supreme Court. I’m not going to comment about the merits or demerits of the new farm laws or the issues involved. However, let’s try to understand it from the broader perspective of the whole economic ecosystem.

The agriculture had been the dominant sector of the planetary economy since the dawn of the civilisation until its supremacy was replaced by the first three Industrial Revolution beginning two hundred and fifty years ago. The Industrial Revolutions were also accompanied by the emergence of capitalism and a market economy. The three Industrial Revolutions created huge job opportunities and helped assimilation agrarian workforce into secondary and tertiary segments of economy, however, even today, according to the estimates of the FAO, about sixty per cent of global population is still dependent, directly or indirectly, upon agriculture and yet its contribution to the world GDP is just about 4%, a dismal figure in comparison to the combined contribution of 90% of the secondary & tertiary sectors of economy. The agricultural produce at the primary level is disproportionately insignificant given the size of the population that it is required to sustain. The Indian scenario isn’t much different, except that the GDP contribution of this sector (12-15%) to the econom, is somewhat higher than the world average. This is s. Case of sectoral income inequalities.

To minimize dependency of the vast population on agriculture, the only plausible and time tested solution adopted was to shift it to industry and services sectors. This was facilitated by the creation of a very large workforce in technology driven sectors during the earlier three Industrial Revolutions, however, now, the tables are appearing to be turning around as some of the reports indicate that there will be net job losses during the regime of the Fourth Industrial Revolution due to artificial intelligence, robotics, cognitive analytics, 3D printing, genomics and, overall, due to a range of new technologies that are fusing the physical, digital and biological worlds, impacting all disciplines of life, economies and industries, and even challenging ideas about what it means to be human. And, therefore, the doors that were historically open during the last two centuries are closing down to assimilate the huge population from agriculture.

On this backdrop, it has become imperative to rethink of economic order to contain the unrest, turmoils and conflicts as the majority of the population getting restive due to scarcities of opportunities to earn a livelihood especially from the sector of agriculture. The Central and the State Governments are continuously trying to improve the economic status of farmers, however, these efforts do not get translated into a sustainable increase in the per capita income of the farmers.

Instead of addressing the problem faced by the farmers alone, there is a need to take a comprehensive view for a new economic model on the backdrop of the highly distorted economic inequality, subjugation of technology by the secondary and tertiary sectors, impending large scale job losses sealing opportunity for shifting people from agriculture to other sectors. The country needs to adopt pragmatic, disruptively innovative fresh thinking commensurate with the currency of the time. From this perspective, many new innovative models could be designed.

I am proposing one such solution that could be employed to address the issues haunting agrarian economy and pave way for retention of population in the agriculture sector by bringing rural average household income closer to that are engaged in manufacturing and services sectors without making any reference to the farmers’ agitation, or the new farm laws, continuance or abolition of APMCs, MSP, DBT, subsidies etc. I am proposing it as an independent initiative notwithstanding any of the above mentioned issues.

The proposal is simple, however, it would require deployment of digital technologies that are being used commercially on a large scale and; it wouldn’t be an impediment as the country is blessed with the availability of such technologies.

My proposal involves fixation of prices of all the agricultural primary goods on a day to day basis or periodically by the local farming community. Once such prices are discovered and fixed the first trade will have to procure that commodity at a price not below the price so fixed. The subsequent sales or trades can happen depending on the market forces. I propose to suggest a name to this scheme as

“First Trade Minimum Price” (FTMP).

The exercise of fixation of prices could be enabled through the use of robust digital technologies that are easily available. The organisational structure, statutory/regulatory mechanisms, the use of technologies are the aspects of detailing and are not at all difficult to conceptualise and implement. As the proposal is extremely simple, it wouldn’t take a long gestation period to operationalise it. It also doesn’t take away anything that is currently available to the farmer and, hence, I do not apprehend any resistance from them or for that matter from any other quarter.

This proposition is perfectly aligned with the existing accepted and unquestionable practices. It’s a fact that the GDP contribution of the secondary and tertiary sectors combined together is more than ~80% and it’s also a fact that the prices of products or the services of this ~80% economy are determined and decided by the manufacturers of the products or the service providers. My proposition is to enable the farming community also to decide the prices of their products like the secondary and tertiary segments of the economy.

The country and the Government may consider this suggestion to address the issue from all the dimensions and with an eye on the future of the economic well-being of the masses.

Mahesh Zagade(xIAS)

Former Principal Secretary to

Govt of Maharashtra.

( Published in Indian Express earlier)


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