A Plague of Promises

What the Modi economy has done to farmers

31 December 2018
Modi inherited the most positive agricultural scenario India had seen in a long time. From that relative high, Indian farming has plunged to a new low.
ajay verma / reuters
Modi inherited the most positive agricultural scenario India had seen in a long time. From that relative high, Indian farming has plunged to a new low.
ajay verma / reuters

On his way to the prime ministership in 2014, Narendra Modi promised that, if his Bharatiya Janata Party won power, the government would raise the minimum support prices paid for crops such as rice and wheat to guarantee farmers a 50-percent profit on their production costs. The benchmark was first proposed by the Swaminathan Commission, formed in 2004 to address farmers’ economic plight, and Modi castigated the incumbent Congress-led administration for not implementing the commission’s recommendations. The BJP’s campaign manifesto repeated Modi’s pledge, and promised other measures “to enhance the profitability in agriculture,” such as lowering the cost of agriculture inputs and credit.

After Modi was elected, the gargantuan Food Corporation of India stopped procuring foodgrain from states that paid farmers bonuses on top of existing minimum prices. This led states to curb the practice, and so pushed farmers’ incomes down. By February 2015, the Modi government admitted before the Supreme Court that it had reneged on its pre-election promise. In response to a petition by a farmers’ organisation asking for measures to make agriculture more commercially sustainable, the government stated that minimum support prices, or MSPs, are set based on “objective criteria considering variety of relevant factors. Hence, prescribing an increase of at least 50 percent on cost may distort the market.”

In its first four years in power, the government kept MSPs so low that for seven major crops they did not even cover production costs. Farmers’ returns did not come anywhere close to 50 percent for any crop at all. MSPs offered lower net returns on almost all crops than they had under the previous government. Amid this, farmers had to deal with the disasters of consecutive nationwide droughts between 2014 and 2016, of Modi’s demonetisation experiment, and of falling global prices for agricultural commodities. The droughts were not the government’s doing, but its deplorable response to them was. Deflation in agricultural commodities was in great part beyond its control, but that was made up in large part by windfall gains for the treasury from a fall in the price of crude oil, which could have been passed on to farmers. Demonetisation, of course, was a catastrophe made by Modi. Added to this, many farmers faced determined efforts by the government to weaken their hold over their land, and often to take their land away completely.

The combination of these factors has left farmers desperate. They were not pampered earlier—tens of thousands of them committed suicide during the Congress years, just as tens of thousands had done earlier—but the decade before 2014 had seen a rise in agricultural growth rates and farmers’ incomes, and an increase in agricultural exports. The farming sector has been in a structural crisis for at least three decades, if not the entire duration of the Indian republic, but Modi inherited the most positive agricultural scenario there had been in a long time. From that relative high, Indian farming has plunged to a new low. Since last summer, what were earlier sporadic and localised farmers’ protests have coalesced into a movement. Late this November, tens of thousands of farmers from multiple states marched together in Delhi to demand redress. (Disclosure: I am a political activist, and as the founder of a national farmers’ movement, I helped organise the march. My interest in the agricultural economy dates back to my career as a social scientist.)

Farmers have not failed to connect the government’s policies to their plight. The last two years have seen a steady decline in the popularity of the ruling BJP in the countryside, and a survey at the start of this summer, by the Centre for the Study of Developing Societies, showed a 12-percent swing against the party among farmers.

Yogendra Yadav Yogendra Yadav is a former social scientist who is now a political activist. He is the founder of Swaraj Abhiyan, a sociopolitical organisation at the head of the Jai Kisan Andolan, a national farmers’ movement.

Keywords: Elections 2019 farmers agriculture agrarian crisis Rural Economy crop insurance farmers' march MSP