#148 All The Wrong Reasons

India Policy Watch #1: Nayi Umar Ki Purani Fasal&#160;<br/><br/>Insights on burning policy issues in India<br/><br/>&#8212; RSJ<br/><br/>PM Modi, in an address to the nation at 9 AM on Friday, repealed the three farm laws that had been pushed through in the parliament without any debate more than a year ago. Choosing the occasion of Guru Nanak Jayanti, the PM said his government was unable to convince the farmers about the benefits of the laws. We have written a few times earlier about our view on farm reforms and these three laws in particular (we have linked them at various places in this edition). This repeal might well mean farm sector reforms are dead and buried for a decade, if not more. This is going to be terrible for Indian agriculture in the long term. That apart, as public policy watchers, there are few important lessons to take away from the entire episode.&#160;<br/><br/>Before we get onto what we learnt, a short summary of where we stand on the farm laws. Firstly, on any measure of outcomes, Indian agriculture is in a terrible state. Things are so bad that you can safely say there's no change that can make it any worse. In edition <a href="https://publicpolicy.substack.com/p/70-concentrated-costs-diffused-benefits">#70 (Section: No Looking Back on Agricultural Reforms)</a>, we wrote:<br/><br/>The dismal state of Indian agriculture bears no repetition. The farm income growth has been stagnant for the last 6 years. The small and marginal farmers who constitute 86 per cent of India&#8217;s peasantry barely make a living out of farming with average per capita annual income below Rs. 100,000. About 45 farmers die by suicide on an average every day. The Food Corporation of India (FCI) buys the produce at the minimum support prices (MSP) from the mandis and distributes it at a subsidised rate through the public distribution system (PDS). This subsidy bill has grown to an unmanageable level.<br/><br/>The FCI borrows from National Small Savings Funds (NSSF) to keep its operations going. It is estimated this