Late last year, Prime Minister Narendra Modi's government introduced three laws meant to open up agriculture markets to companies and attract private investment, triggering India's longest-running protest by farmers who said the reforms would allow corporations to exploit them.
"This is not good for agriculture, this is not good for India," said Gautam Chikermane, a senior economist and vice president at New Delhi-based Observer Research Foundation.The u-turn does allay farmers' fears of losing the minimum price system for basic crops, which growers say guarantees India's grain self-sufficiency.
And, in the absence of private investment,"inefficiencies in the system will continue to deliver wastage and food will continue to rot," he warned.India ranks 101 out of 116 countries on the Global Hunger Index, with malnutrition accounting for 68% of child deaths. The farm laws promised to allow private traders, retailers and food processors to buy directly from farmers, bypassing more than 7,000 government-regulated wholesale markets where middlemen's commissions and market fees add to consumer costs.
Other firms specialising in warehousing, food processing and trading are also expected to review their expansion strategies, he said.Poor post-harvest handling of produce also causes prices of perishables to yo-yo in India. Only three months ago, farmers dumped tomatoes on the road as prices crashed, but now consumers are paying a steep 100 rupees a kg.
"Crop diversification would also have helped rein in subsidy spending and narrow the fiscal deficit," said Sandip Das, a New Delhi-based researcher and farm policy analyst.