India’s Modi Should Hold Firm on Farming
(Bloomberg Opinion) -- India’s agitating farmers show no signs of fading away. Angry cultivators have been camped on the doorstep of Delhi for weeks through north India’s bitingly cold winter. They have shown a talent for staying in the headlines as well, with attention-grabbing stunts such as staging a tractor convoy to rival India’s official Republic Day parade.
Prime Minister Narendra Modi’s government looks rattled. But it should hold firm. The reforms that have so incensed protesters go further in addressing Indian agriculture’s most intractable problems than any previously contemplated. Those changes need to be protected, not abandoned.
Three new laws in particular, passed hastily and in open defiance of parliamentary norms last year, sparked off the agitation. Now the federal agriculture minister, who has been deputed to negotiate with the protesters, has offered to postpone implementation. This follows a series of other concessions in December.
The farmers camped out near Delhi, however, are campaigning against a whole slew of reform measures both real and imagined. They want a total and immediate repeal of the laws passed last year. In addition, they want the government to guarantee that the current system of state-run procurement of rice and wheat will continue indefinitely — even though it hasn’t been threatened yet.
The farmers recognize they have got the government playing defense. There are cracks even within the ruling establishment. The ruling Bharatiya Janata Party’s parent organization, the Hindu nationalist Rashtriya Swayamsevak Sangh, has hinted that the government should compromise.
This isn’t a surprise. In spite of the rhetoric of its men in government, the RSS has never been sold on the whole “market economy” idea. Still, it’s remarkably disappointing that the government seems willing to roll back some of its most substantial reforms to date because of the vocal opposition of the country’s most heavily subsidized and richest agricultural producers.
Let’s not beat about the bush here: The government has already conceded too much. It has, for example, agreed to protect farmers’ access to free electricity. This is not just unaffordable, it holds back the modernization of India’s power sector and thus the growth of renewable energy. Authorities have also promised they won’t go after farmers who burn agricultural waste — a major contributor to air pollution across India’s northern plains, home to almost all of the world’s most unhealthy cities.
What’s at risk isn’t just a couple of laws, but India’s commitment to the transition to a more environmentally sustainable and equitable growth model. In their demand that unsustainable practices continue into a new and more environmentally conscious age, the protesters are reminiscent of France’s gilets jaunes more than anything else. And Modi’s government seems more inclined to buckle than even French Prime Minister Emmanuel Macron’s — even though Modi, with a 78% approval rating, is far more politically secure than Macron.
Given the stakes, it is galling how abysmal the government’s political management and messaging has been. For one, it has failed to communicate its case effectively to those farmers who would benefit from the reforms and who could conceivably have prevented their colleagues from hijacking the narrative. It has alienated a long-term ally — a Sikh religious party called the Akali Dal — that could otherwise have helped handle the reform’s fallout.
And the government should understand by now that reform of one subsidy is best introduced with a clear pathway to an alternative form of support. That simply hasn’t been on offer. Before surrendering to the protesters, the government should at least try to work out what it might do to sweeten the deal it originally proposed.
Modi and his advisers should also be under no illusions about the price of retreat. They tried to deal with the agricultural sector’s problems once before, early on in Modi’s tenure. Their attempt to strengthen the government’s powers to acquire farmland had to be rolled back following noisy objections led by the political opposition.
Objectively, those land-acquisition laws were as regressive as the new agricultural reforms are progressive — but that’s not the point. The lesson is that Modi lost the initiative on reform in 2015 and never fully recovered it during his first term. Neither he nor India can afford to make the same mistake twice.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mihir Swarup Sharma is a Bloomberg Opinion columnist. He is a senior fellow at the Observer Research Foundation in New Delhi and head of its Economy and Growth Programme. He is the author of "Restart: The Last Chance for the Indian Economy," and co-editor of "What the Economy Needs Now."
©2021 Bloomberg L.P.