IMF endorses farming reforms by Indian government

Provided a social safety net is given to the farmers the government’s pathbreaking legislations could produce significant results according to the world’s apex financial body.

The protest by the Indian farmers has entered into a new stage with the Indian Supreme Court ordering an indefinite stay against the path breaking agricultural laws passed by the Indian government.

The nation’s apex court stated they it wants to set up a panel to hear the grievances of the farmers who contend that the reform measures would, in the long run, benefit private buyers and growers. They are arguing for a full repeal of the farm laws.

The Indian government had initiated and passed three revolutionary laws to prop up the plight of the sector and the farmer – the three Bills now Acts of Parliament, are the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020 and Essential Commodities (Amendment) Bill 2020.

Freeing the farmer from shackles

They were forged to ensure that the farmer would be free from socialist-era regulations that prohibit the community from seeking out price discovery and opening up the farming sector to foreign and domestic investments that would have brought in billions of dollars in investment aided by new technology to boost production further.

Against the backdrop of the protests comes the official observation by the International Monetary Fund (IMF) who have pronounced that the farm bills passed by the government have the potential to represent a significant step forward for agricultural reforms.

The added caveat by Gerry Rice, Director of Communications at IMF has been that there is a necessity to strengthen the social safety net for those who might be adversely affected by the transition to the new system,

IMF endorses farming reforms

"We believe the farm bills do have the potential to represent a significant step forward for agricultural reforms in India," Rice said. "The measures will enable farmers to directly contract with sellers, allow farmers to retain a greater share of the surplus by reducing the role of middlemen, enhance efficiency and support rural growth," he added.

"However, it is crucial that the social safety net adequately protects those who might be adversely impacted during the transition to this new system," the spokesperson said responding to a question on the ongoing protests by farmers against the laws in the country. This can be done by ensuring that the job market accommodates those that are impacted by the reforms. And of course, the growth benefits of these reforms will depend, critically, on the effectiveness and the timing of their implementation, so need to pay attention to those issues as well with the reform," Rice said.

Farmers turn around the economy

The pathbreaking legislations initiated by the government, in May 2020, ensured that rural India, which has played a stellar role in the turnaround of the Indian economy during the crippling times of the pandemic, would have found its place under the sun. And with good reason too, given that it provides a living to at least 60% of India’s population.

With the farming sector orchestrating an inspiring report card during times of economic crisis the reforms were going to ensure that foreign investors and private players would have seen it as a happy environment to do business.

More importantly, the reforms would have brought an end to the vice-like grip of the middleman who, for decades, has proved to be a thorn in the flesh of the farmer. A more enabling free trade environment was designed to guarantee that the farmer could sell his produce to private buyers and large companies at a better price. Additionally, farmers could have negotiated contracts with food processing firms, exporters and retailers.

Modi boost for agricultural sector

Indian prime minister Narendra Modi had stated “Our agriculture sector is in desperate need of latest technology that assists the industrious farmers. Now, with the passage of the bills, our farmers will have easier access to futuristic technology that will boost production and yield better results. This is a welcome step.”

Modi added that, “For decades, the Indian farmer was bound by various constraints and bullied by middlemen. The bills passed by Parliament liberate the farmers from such adversities. These bills will add impetus to the efforts to double income of farmers and ensure greater prosperity for them.”

The observations by the IMF support the government’s intentions. The protesting farmers would do well to take a step back and assess what they would lose through these protests when weighed against the backdrop of what they think they can gain. India is poised to become the food export powerhouse of the world and the Indian farmer is the country’s superhero.