[dan-robertson]

The current way that (all?) farming works in India is that farmers take their produce to some (government run?) wholesaler and they get at least some government-mandated minimum price for their produce. Somehow this makes its way into the rest of the local and global economy. The new proposal is advertised as economic liberalisation of this system and involves scrapping the minimum price guarantee.

It is advertised as allowing more efficiency in the market and giving farmers the option to sell their produce to more discerning buyers at higher prices. Others worry that farmers will be worse off and won’t get such good prices, or may be exposed to more price risk (obviously it is unreasonable to tell these smallholders to sell futures and buy insurance against low yields). They suggest allowing farmers to choose who they sell to but still giving the option of getting a minimum price, but this would be terrible for whoever guarantees the min price due to adverse selection. The law’s proponents claim that this opposition is merely fear of any change.

I think there is also a general mistrust of the government and an expectation of corruption and that a big law might be secretly designed to benefit the lawmakers who implement it.