After the Farm Laws: India's Agricultural Markets Are Still Waiting for Reform

In November 2021, after nearly a year of sustained protest by farmers camped at Delhi's borders, the government repealed three agricultural laws it had passed in September 2020, a rare instance of a legislative reform being formally withdrawn under the weight of sustained public mobilisation rather than judicial intervention or a change in ruling party. The repeal was, by almost any account, a political necessity: the protests had drawn farmers from Punjab, Haryana and western Uttar Pradesh in numbers large enough, and sustained for long enough through a pandemic winter, that the political cost of persisting had come to outweigh whatever economic benefit the laws were projected to deliver. What the repeal did not do, and could not do, was resolve the underlying problems in Indian agricultural markets that the laws, however contentiously, had set out to address.

The three laws sought, respectively, to allow farmers to sell produce outside the government-regulated Agricultural Produce Market Committee mandis without additional taxes, to provide a legal framework for contract farming agreements between farmers and buyers, and to remove restrictions on stocking limits for essential commodities that had previously constrained large-scale private storage and trading. The government's stated rationale was that Indian farmers were trapped in a mandi system that, while nominally regulated to protect them from exploitative middlemen, had in practice often concentrated market power among a small number of licensed commission agents, restricted farmers' ability to sell to the highest bidder across state lines, and left significant post-harvest value uncaptured by the farmers who bore the production risk.

Why farmers did not trust the reform

The core farmer objection was not, in most credible readings, opposition to market reform in principle but a well-founded fear that the laws would, over time, weaken the minimum support price and mandi procurement system that Punjab and Haryana's farmers in particular had come to depend on, without any comparable legal guarantee protecting that system going forward. The laws did not contain an explicit provision undermining MSP, but they also did not contain any provision guaranteeing it, and the government's failure to offer a clear, credible commitment on MSP procurement, at a moment when farmers had genuine reasons for distrust given years of stagnant real farm incomes, hardened opposition into the mass protest that eventually forced repeal.

This is a case where process failure compounded a substantively contestable but not unreasonable policy idea. Agricultural economists across the ideological spectrum, including some sympathetic to farmer concerns, have long argued that India's mandi system, and the licensing regime that grants commission agents effective local monopolies in many APMC markets, does constrain farmer choice and price realisation in ways that genuine reform could address. The government's failure was less in the underlying diagnosis than in attempting sweeping national legislation without the extensive consultation, pilot testing, and confidence-building measures that a change of this magnitude, touching the livelihood of a still-enormous share of India's workforce, required.

What actually changed, and what did not

Three years after repeal, the practical landscape of Indian agricultural marketing looks much as it did before the laws were passed, with a few incremental exceptions. The Electronic National Agriculture Market, or eNAM, launched in 2016 to create an online trading platform linking mandis across states, continues to operate and has grown in the number of mandis integrated, though independent assessments including studies by agricultural policy researchers have found that actual trading volumes and price discovery improvements attributable to eNAM remain modest relative to its ambitions, constrained by the same physical infrastructure, quality assaying and logistics limitations that afflict the traditional mandi system it was meant to supplement.

Contract farming arrangements continue in various forms, particularly for high-value horticultural and processing crops, under state-level laws that predate the repealed central legislation, but remain a marginal share of total agricultural transactions nationally, concentrated among relatively better-resourced farmers who can absorb the risk and negotiating asymmetry that contract farming with large corporate buyers can involve without adequate legal protection. The stocking limit liberalisation, the least controversial of the three original laws in retrospect, has had limited practical effect given that essential commodity stocking restrictions have in any case been periodically reimposed by the government during episodes of price volatility, undercutting the very predictability that liberalised stocking rules were meant to provide private traders and processors.

The MSP demand and its fiscal reality

Farmer unions, having secured the laws' repeal, have continued to press for a legal guarantee of minimum support price applicable to all crops and all farmers, not merely the wheat and rice currently procured at scale, primarily in Punjab, Haryana and parts of a few other states. This demand carries genuine moral force given the income insecurity Indian farmers face, but its fiscal and logistical implications are substantial and rarely engaged with honestly by either side of the debate. Extending guaranteed MSP procurement across all twenty-three crops for which MSP is currently announced, at the volumes that would be required to make the guarantee meaningful, would require procurement, storage and distribution infrastructure that does not currently exist at that scale, and a fiscal commitment that independent economists have estimated could run into several lakh crore rupees annually depending on assumptions, a sum that would crowd out other priorities in already stretched state and central budgets unless financed through corresponding cuts elsewhere.

Reform without repeating 2020

The honest position, one that both the government and farmer unions have found politically inconvenient to state plainly, is that Indian agricultural markets do need reform, that the specific 2020 laws were a defensible attempt at that reform executed with insufficient consultation and an unforgivable failure to address the MSP anxiety at the heart of farmer opposition, and that a universal MSP guarantee as currently demanded is not fiscally viable in its most expansive form without significant redesign. A more productive path forward, one occasionally gestured at in committee reports that have followed the protests without translating into legislation, would combine targeted, well-communicated market reforms, giving farmers genuine choice in where and to whom they sell, with a strengthened and more transparent income support mechanism, potentially expanding direct cash transfer schemes such as PM-KISAN or price deficiency payment models that protect farmer income without requiring the government to physically procure and store every crop at scale.

Three years after the protests ended, no government has shown the political appetite to reopen this conversation, chastened by how badly the last attempt went. But the mandi system's structural weaknesses, the market power concentrated among licensed commission agents, the poor price discovery in markets far from urban demand centres, the limited cold storage and processing infrastructure that leaves a significant share of perishable produce wasted before it reaches a buyer, have not resolved themselves in the interim. They are waiting, as they were in 2020, for a government willing to attempt reform with the patience and trust-building the last attempt so conspicuously lacked.