Author: Arun R Swamy, University of Guam
Late last year, Indian Prime Minister Narendra Modi announced the repeal of three laws intended to liberalise agricultural trade within the country. The announcement attracted worldwide attention, giving some indication of how enormous a political headache the laws had become.
For over a year, mass protests by farmers camped in and around New Delhi had been an international talking point. Concerns were often borne out by the government’s heavy-handed responses and accusations that the protestors were unpatriotic. That the protestors’ victory was framed as a win for democracy against an autocratic regime is not surprising.
But at its core, the protests were not about democracy. It was about the economic interests of some farmers in maintaining a set of policies dating back to the food shortages of the 1960s when the government promoted hybrid high-yield varieties of rice and wheat with a wide range of subsidies. Over time, the subsidies came to cover agricultural inputs — seeds, fertilisers, power and water — as well as the prices paid to farmers and by consumers. The policy led to a dramatic increase in food production, the so-called Green Revolution, but also brought problems in its wake.
Subsidies to farmers and consumers were closely linked. The purchase of grain by the Food Corporation of India for the Public Distribution System was redistributed to consumers at subsidised prices. While private traders were allowed to purchase grain, trade across state boundaries in grains and other ’essential commodities’ was restricted to prevent profiteering at the expense of food deficit states.
Prices paid to farmers by the government increased until they were well above market prices in many states and constituted a Minimum Support Price (MSP). Farmers preferred to sell their grain to the government and huge grain surpluses rapidly outstripped warehouse capacity.
By the 1980s, the combined cost of food and agricultural subsidies was a significant fiscal burden. Some questioned whether farmers were actually subsidised once trade policies were taken into account. Import restrictions on fertiliser and export restrictions on grain may have represented hidden taxes on farmers that ate up much of the value of the subsidies. But, economists on both left and right decried the size of the subsidies.
The regional, class and caste biases of the subsidies also attracted criticism. The coverage of the Public Distribution System was uneven. Some states expanded it to the countryside, while in others it remained a predominantly urban intervention benefiting the middle class. Farmers who benefited from agricultural subsidies tended to be concentrated in a few regions deemed suitable for high-yield variety seeds. They often came from owner-cultivator castes who formed the middle stratum in the countryside in many parts of the country.
Farming communities were both agents and beneficiaries of agricultural modernisation. Caste solidarity facilitated their political mobilisation. Subsistence farmers, farmers in drier areas growing other crops like onions and agricultural workers from lower castes benefited little from the policies, apart from the increase in food output.
The class bias critique can be exaggerated. While critics often refer to ’rich farmers’, even prosperous Indian farmers are small farmers by global standards and poor by Western ones. The economic challenges faced by farmers, especially in the states characterised by more commercial crops, are significant and farm indebtedness has been blamed for persistent suicides by farmers.
The caste and regional biases are central to understanding the politics of Indian farm prices. Farmers’ organisations have been active politically in many states since the 1970s. But, the proximity of wheat-growing Green Revolution areas to New Delhi and the supporting infrastructure provided by caste organisations gave them special clout in these regions. The Bharatiya Kisan Union, for example, mounts force in the capital whenever policies that threaten the subsidy regime are proposed.
In the 1990s, as India pursued economic liberalisation, dealing with agricultural subsidies became one of the residual issues that successive Indian governments failed to deal with. While food subsidies were reduced, the MSP for key agricultural commodities was expanded.
It was against this backdrop that Modi’s government passed three reform laws in September 2020. The laws allowed farmers to sell their grain anywhere, allowed long-term contracts between farmers and trading companies and removed many agricultural products from the essential commodities list. Farmers’ concerns have focused on the potential impact of these measures on farm prices. Farmers fear that the increased role of private contracts would lead to a gradual erosion of the MSP paid by the government.
While it is tempting to view the farmers’ protest as a blow for democracy against an authoritarian government, the economic pressures to reform the agrarian sector and the political obstacles to do so have been around for decades. The context of farm politics is essential to understand why the protest ensued, why it lasted so long and why farmers won.
Modi’s decision to withdraw the laws was undoubtedly motivated by political concerns, as was the decision of all opposition parties to oppose it. The need for change will not go away, but the Modi government’s characteristic preference for a frontal assault may yield to more incremental steps less likely to provoke another mass demonstration.
Arun R Swamy is a Professor of Political Science at the University of Guam.
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