Farm protest aim is to put Modi Govt on back foot

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Farm protest aim is to put Modi Govt on back foot

Sunday, 10 January 2021 | Swapan Dasgupta

The ongoing agitation is an instrument to put the Modi Government on the back foot. The calculation is that if Modi steps back, it will have a knock-on effect and reduce the Government’s appetite for future reforms. And, if the reforms are halted, the Modi Government will lose its momentum and, like the UPA-2, merely go through the motions for the rest of its second term

 The stir in and around the national Capital, Delhi, with farmers from Punjab, Haryana and western Uttar Pradesh teaming up with professional agitators who were earlier sighted at last year’s protests against the Citizenship (Amendment) Act, has, predictably, attracted huge attention. Unlike the stereotype of “peasant” agitations, the protesters aren’t from the most impoverished sections of society. If the analysis of economist Surjit Bhalla is right, the sight of quaint old men and feisty ladies, not to mention itinerant Nihangs, shivering in the winter rain but determined to fight for their entitlements is real but also deceptive.

Using official data, Bhalla has strengthened the impression that the movement isn’t really born of economic desperation but stems from a dogged defence of existing privileges. It is a movement against reforms.

According to Bhalla, the top 2 lakh farmers of Punjab and Haryana have incomes that are among the top eight per cent, both rural and urban. More significant, the top 20,000 farmers have incomes that are in the top two per cent. Apart from the fact that agricultural income is free of income tax, wheat farmers enjoy a higher rate of return from rice farmers. Using data from the Commission on Agricultural Costs and Prices, he has calculated that “an average rice-farmer in India gets a return of 90 per cent over costs excluding family labour; an average wheat farmer obtains a return of 161 per cent.” Furthermore, the profits are markedly different across regions. “The Punjab farmer has the lowest cost of production, approximately 75 per cent of average for wheat and 59 per cent of all-India average for paddy. The yields are also higher, with the net result that the Punjab-Haryana large farmer earns Rs 1.25 lakh per year per hectare from cultivation of wheat and paddy.” Additionally, the average holding of the 197,000 top farmers in Punjab and Haryana is 6.3 hectares. At “Rs 1.25 lakh per hectare, this translates into an annual tax-free income of Rs 7.9 lakh.” The largest farmers, with holdings of 12.6 hectares on an average are estimated to have agricultural income of approximate Rs 15.75 lakh annually.

The fact that those protesting on the Delhi border aren’t exactly subsistence farmers does not necessarily make this movement illegitimate or less worthy of national attention. It has about the same measure of significance as the protests of diamond traders and cloth merchants in Gujarat against the Goods and Services Tax before the Gujarat Assembly election of 2017. Yet, the social character of the agitation explains a few things.

First, it explains why the movement is confined to the Green Revolution tract. In other parts of India where smaller farmers don’t have means of securing the Minimum Support Price for wheat and rice, there is a natural attraction for the deregulation of the market and liberation from the middlemen who are the only real beneficiaries of the old APMC Act. The enacted reforms are also likely to spur investments in agro-industries, including cold storages. These investments have so far been patchy owing to laws against “hoarding”— restrictions that were put in place during the era of food shortages.

Secondly, the support extended to the agitating farmers by a galaxy of economists who had earlier been pressing on Governments to undertake the most challenging of economic reforms may seem puzzling. It confirms that the objection is less to the song than the singer. This may explain why a substantial body of the orphaned Left has rallied behind a cause that in earlier decades would have been debunked as kulak.

Finally, the ongoing agitation is an instrument to put the Modi Government on the back foot. This, again, is a natural goal of the Opposition which is yet to fully recover from the drubbing in the 2019 general election. The Opposition had begun 2020 by instigating a Muslim revolt against the Citizenship Amendment Act. This fulfilled a short-term function during the Delhi Assembly election the BJP lost miserably, but its all-India objective was stymied by the outbreak of the Covid-19 pandemic. During the lockdown, there was also an attempt to use the panic among migrant workers for partisan ends. However, this too had limited success, as was evident from the absence of any backlash during the Bihar Assembly election. The farmers’ agitation in Punjab and Haryana is another roll of the dice. The calculation is that if Modi steps back, it will have a knock-on effect and reduce the Government’s appetite for future reforms. And, if the reforms are halted, the Modi Government will lose its momentum and, like the UPA-2, merely go through the motions for the rest of its second term.

The extent to which the Prime Minister has become a personal target for those who seek to put the quest for political power above reforms should not be underestimated. Whereas earlier Governments had tried to manage reforms by stealth, Modi has expended his enormous political capital to accelerate the pace of change in India. Whether it is the expansion of banking services to reach the lowest layers of society, managing the introduction of GST and increasing the quantum of tax compliance through a combination of carrot and stick, the Prime Minister has pushed through reforms relentlessly. He has always believed that he has the political mandate to usher change. Nor has he been afraid of the political fracas that invariably results from change. He has confronted challenges headlong, even if it has involved local difficulties. Modi, it would seem, has repeatedly threatened the cosy world of those who are comfortable in a world where stagnation and the status quo go hand in hand.

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