Never say die. That seems to be the spirit driving the Modi government in its relentless pursuit to privatise agricultural trade.

Why do I say so?

The Collective’s latest investigations into PM Aasha, a failed farmer-support scheme rolled out in 2018, has given this reporter an insight into the persistent quest of the government to privatise agriculture trade, no matter how bad the setbacks are.

Though our latest investigation was on the tainted origin of PM Aasha scheme, reams of internal official documents helped me connect the dots and see the hidden agenda: PM Aasha is part of a series of attempts since 2017 to dismantle government-regulated produce markets known as APMC mandis and open the sector to large private investors.

This revelation underscores a constant push to privatise the agricultural sector and remodel regulations.

Internally, the government has laid bare its intentions – that it should get out of agriculture and make way for the private sector as part of “opening up of the economy”. 

The merits or demerits of such a move remain hotly debated. But a few things are obvious.

One, to expect Indian farmers to function in a “free market” and compete in the international arena would be unfair — given the fact that even in countries like the US agriculture is heavily subsidised and farmers are significantly more well-off than their Indian counterparts. 

Two, India’s farmer unions themselves have opposed what they see as an attempt to allow a corporate takeover of agriculture, while the government has adopted a ‘my way or the highway’ approach (as one saw with the three farm laws). This led to a wave of panic among farmers.

Finally, as we will see in the case of PM Aasha, the government has not always been upfront about its intentions.

Let’s start from the beginning.

The Modi government began laying the road to bring private companies into the farm sector in 2017.

It started with the model Agricultural Produce and Livestock Marketing (APLM) Act. The model act is a proposed set of laws for “liberalised” and “progressive” functioning of agriculture markets, and the states could choose to adopt or reject them.

The model Act sought to put an end to the dominance of APMCs. Further, according to the model Act, the states had to make way for privately owned licensed markets.

The model Act to privatise agriculture marketing flopped as most of the states stayed away from adopting the law.

For the Modi government, introducing private businesses was always the way to go in fulfilling its proclaimed aim of doubling the farmers’ income and the larger agenda of cutting down budget-sapping subsidies to farmers in the form of MSP system for basic crops.

In its second attempt to be lucky, the Union government launched the PM Aasha scheme in September 2018.

PM Aasha is a mashup of three separate schemes – the first is the decades-old direct procurement by the Union government, the second is a price protection scheme under which the government compensates farmers for losses and the third a pilot project to test the viability of private players buying from farmers at MSP.

While the Union government would have bedazzled you with headlines about the new scheme that it has launched to help farmers’ double their incomes, official records revealed something else.

PM Aasha’s fine print reveals that the scheme was a backdoor entry for privatisation of agricultural marketing.

It tried to strong-arm the states that had earlier stayed away, into accepting the reforms outlined by the government in the model APLM Act to avail of the benefits of PM Aasha.

For a state to even be eligible for the PM Aasha scheme, it first had to either implement the reforms envisioned under the model APLM Act 2017, like making it easy for private businesses to run wholesale produce markets, or give the Union government a definite timeline by which the same would be done.

That wasn’t all.

With the scheme, the Modi government was not just aiming for reforms, but was attempting to cut its cost in procuring crops at assured minimum prices and pass the burden to states in supporting farmers’ income.

Internal records show that the Union government was miffed with the states because it had to foot the entire bill in procuring crops from farmers.

“The liability of the state is only limited to waiver of the mandi fee and facilitating logistic arrangements for procurement operations,” the Union government rued. “Since agriculture is a State subject, states need to play a more proactive role in delivery of MSP to farmers by bearing the cost beyond a certain limit of procurement/support which is covered by the central government,” it added.

This logic of the Union government made it into the fine print of the Price Deficiency Payment Scheme (PDPS), one of the components in PM Aasha scheme and the only new nationwide policy tool the scheme brought to the table. Under PDPS, the government promised to top up the earnings if oilseed farmers earned less than the MSP for their crop.

The guidelines for PDPS said the Union government would compensate losses only up to 25% of a farmer’s produce. If the state government wants to compensate farmers for losses beyond a quarter of their produce, it would have to foot the entire bill.

Not only did the Union government want states to pick up the bill for implementing them but also wanted to curtail the rights of states in how agricultural markets are run in their territory.

Most states in India have their own rules on how agricultural produce is sold at APMC mandis. Farmers auction off their produce at the markets, which keeps a record of all such sales made. Traders, referred to as middlemen, buy from farmers at market prices with the government also routinely purchasing produce for its own welfare schemes, and to keep market prices in check.

But the majority of states decided to stay away from PM Aasha because, as our investigations revealed, the idea itself was tainted.

PM Aasha was based on a scam-riddled failed experiment in Madhya Pradesh that the Union government scaled up nationally to impose on states despite the majority of states and experts rejecting the idea from the word go. The Madhya Pradesh PDPS experiment had helped traders rig prices of produce in the markets, suppress prices and cheat the government into footing the bill (read more of it in our investigation).

Upset with this lack of interest from states, the Union government ditched the piecemeal approach and, by its own admission, decided to go the whole hog to get what it always wanted.

It imposed the three contentious farm laws across the country in September 2020. And it sparked a farmers’ uprising.

While with PM Aasha the government tried to sugar-coat the imposition of privatisation and failed, it gave up all such pretensions and rammed in three farm laws meant to open up agriculture markets to companies and attract private investment.

One of the three, the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, sought to establish private markets just like the APLM Act envisioned.

Experts pointed out that according to the new law, any market set up aside from the ones run by the state would now be under the Union government’s ambit.

In plainspeak, farm laws tried to bring what PM Aasha failed to do.

Opposition-ruled state governments, naturally, were unhappy with the new farm laws. More worryingly, farmers were furious. They soon began a year-long agitation demanding the laws be repealed.  

As protests against the three farm laws raged on, NITI Aayog member Ramesh Chand published a working paper titled “New Farm Acts: Understanding the Implications”. Although it was published as a working paper, the document offers little new insight apart from justifying the enactment of the three farm laws.

Chand, at one point, makes a candid admission: The government imposed the three farm laws since most states were not willing to reform their APMC rules in accordance with what the Union government wanted.

In November 2021, the Modi government was forced to repeal all three farm laws, leaving it unlucky for the third time in privatising crop trade.

But will the Modi government ever say never again or find a more consultative way of bringing in change?