26 Nov
The policy failure in sustaining the farm laws should not deter policymakers from chalking out more inclusive reforms with well-defined implementation plan
The Prime Minister surprised everyone by his recent announcement of repealing the three laws related to structural reforms in the agriculture sector. This announcement came after more than a year-long agitation by the farmers. While it is being perceived by some as a victory of democracy, others see it as a failure of agricultural reforms, which is likely to impact reforms in other sectors like labour and privatisation as well. Only the future will decide the impact of this decision but it would be unfortunate if this leads to postponement of reforms in the agriculture sector. The 1991 economic reforms were all about opening up the industrial and foreign trade sectors — leaving agriculture untouched. This sector is in urgent need of economic reforms to alleviate the distress of farmers and to ensure that farming in India becomes a viable occupation. Poverty and hunger cannot be eradicated by 2030, as visualised in the sustainable development goals, without tangible and structural reforms in the agricultural sector. For years, in agriculture, we have been focusing on management of inputs like seeds and fertilisers, but now, major reforms will have to be undertaken in post-harvest management and agriculture marketing. Unless we can have people moving from disguised unemployment in the farm sector to employment in the non-farm occupations, we would not get the desired improvement in per capita income. Very often, policy issues are caught between what constitutes good economics and whether it corresponds with good politics. Agriculture sector requires policies which not only represent good economics but are also politically acceptable. This is akin to walking on a razor’s edge and highlights the travails of policymaking.
In a remarkable book on economic policymaking, titled ‘In Service of the Republic’, Vijay Kelkar and Ajay Shah have brought out the nuances of economic policymaking. Taking a metaphor from cricket, the authors equate policymaking with a five-day test match, and caution that it should never be taken as a T20 match. This highlights the point that a good policy, which can be implemented successfully, requires detailed deliberations and consideration of the views of all stakeholders. The authors say that there are three steps in policymaking, and a policymaker must ask himself three questions — whether there is a need for a policy to avoid market failure, does the proposed intervention address market failure and finally, whether the state has the ability to effectively implement the proposed intervention. Instances of policy failure are not new to our economy. Kelkar and Shah are of the opinion that policy failures are born out of information constraint, knowledge constraint, resource constraint, administrative constraint and finally, the voter rationality constraint. I believe that the failure of the farm laws could be attributed to the last of these constraints, as it was opposed by the very group for whose benefit the laws had been formulated. The reality is that public policymaking is a far more complex process than the strategies made by the private sector. Numerous stakeholders have to be satisfied, and a multiplicity of objectives have to be attained, which makes the whole process complicated and cumbersome.
A public policy has to go into the root cause of the problem it seeks to resolve. It should aim at treating the disease and not the symptoms. Policymakers must ask the right questions because only then is it possible to get a complete perspective of the problem. Constant engagement with all stakeholders is essential, and diverse opinions have to be synergised. A policymaker must not shy away from his critics, and the whole exercise has to be dynamic. It is also important to build capacity before undertaking any major structural reform.
The above discussion may indicate that policymaking is an arduous task but it is also true that efficient policymaking is directly linked to faster economic growth. Studies show that at the times of policy paralysis, the growth rate of the economy declines. It is, thus, incumbent upon the government to keep responding with policies to address various issues and problems that are thrown up. In the light of this, one would feel that even though the farm laws have been repealed, the process of reforming the farm sector should keep getting the highest priority. Of course, it is important that the policies are properly communicated to the people so that they realise that it is in their own best interest. The best way of doing this is through widespread participation of all concerned stakeholders rather than using a coercive and top-down approach.
One often hears that the policies are good but the implementation has been poor. Having been involved in the implementation of several policies, I have some disagreement with this. I feel very often that policymakers do not take into account the realities of implementation, and that is why many policies fail at the execution stage. A good policy must be accompanied by a realistic implementation action plan, without which it is not possible to ensure that the benefits of the policy would reach those for whom it has been intended.
In the case of the farm sector, I feel there is an utmost need for reforms. Farmers are not getting a remunerative price for their produce, agriculture market system is not working efficiently, cost of cultivation is continuously going up, soil fertility is being adversely affected by excessive use of chemical fertilisers, water is being used indiscriminately and landholdings are fragmented to the extent of being unviable. These are some of the major problems which have been causing farmer distress in the country. We need to set up a process of detailed deliberations between administrators, political executives, agricultural experts and farmers to come out with a comprehensive policy package to address the woes of the sector. Unless productivity and returns in the agriculture sector improve significantly, labor would not move from farm to non-farm occupation, which is essential to bring about faster economic development.
