The recent decision by the Indian government to repeal the farm laws delighted growers across the country, but dismayed economists and corporations, who warn this will cripple the sector. Economists warn that private investment in the farming sector will decline, and that the government will be burdened with the cost of farm subsidies for years.
“This is not good for agriculture or India,” says Gautam Chikermane, a senior economist and vice president at the New Delhi-based Observer Research Foundation, adding that this will dissuade other political parties from attempting similar reforms in the near future. According to Chikermane, in the absence of private investment, inefficiencies in the system will continue to deliver wastage and food will continue to rot.
It is estimated that food wastage in India amounts to 67 million tonnes of food every year, worth about $12.25 billion – nearly five times that of most large economies – according to various studies
The farm laws had proposed allowing private traders, retailers and food processors to buy directly from farmers, bypassing more than 7,000 government-regulated wholesale markets where middlemen add to consumer costs. Ending the rule would have given both Indian and global companies incentives to invest in the sector, say economists, and modernize the food chain. Firms specialising in warehousing, food processing and cold storage are now expected to review their expansion strategies.
However, not all experts re convinced that the enactment of the farm laws was a step in the right direction. “It appears the government realised that there’s merit in the farmers’ argument that opening up the sector would make them vulnerable to large companies, hammer commodities prices and hit income,” Devinder Sharma, a farm policy expert who supported the growers’ movement.
