Modi, Money, and Market Deregulation: India’s farming protests

Randeep Maddoke, Wikimedia Commons

In August 2020, the Indian government made public their proposed new agricultural reform bills. These were met with anger from Indian farmers who, as a result, have been protesting peacefully since then. On January 26th 2021, these protests turned violent, subsequently gaining media attention and leaving many worldwide wondering; what is going on in India?

In September 2020, Prime Minister Narendra Modi passed three agricultural reforms bills through parliament at a record pace. These were the: Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, The Essential Commodities (Amendment) Bill and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill. These are otherwise referred to respectively as the APMC Bypass Bill, the Freedom of Food Stocking by Agribusiness Bill and the Contract Farming Bill. Together they dictate a significant shift in Indian agriculture towards rapid economic liberalisation.

The significance of these new reforms is that the ruling right-wing Bharatiya Janata Party (BJP), led by Modi, has delivered change—desired for years by farmers—to Indian agriculture. The critique, however, is that this has come in an unwanted, corrupt and dysfunctional form. 

Out of India’s population of 1.39 billion people, approximately half are employed in the agricultural sector. Despite this vast workforce, farming is less than 15% of India’s GDP, with the agriculture sector consisting of largely small farm units. The Indian Agricultural Census of 2015-2016 stated that smallholder and marginal farmers with less than two hectares of farming land make up 86.2% of all Indian farmers. 

Before the new bills were introduced, the Indian government provided farmers with subsidies, exemption from income tax and crop insurance, which was the responsibility of each federal state to govern and maintain. Under the Agricultural Produce Marketing Committee (APMC) Act, the sale of agricultural products was authorised at mandis, state-regulated wholesale markets which number around 7,000 nationally. Commission agents were intended to act as links between farmers and traders, but due to the lack of mandis in reality, farmers were reliant upon private traders. In 2015, it was reported that only 5.8% of Indian agricultural households were able to access APMC mandis and get the minimum support price (MSP) for their produce. Mandis have also been uncovered as corrupt and colluding with each other to achieve significant profits for themselves.

Therefore, an insufficient market system together with poorly managed small plot sizes and a lack of modern technology have meant that the farming sector has been crumbling for years. Farmers have been demanding for decades for a raise of the minimum support price and for more effective legislation. These new laws are seen as a clear move by the government to squeeze them out of the system for big business. As such, over 40 farming unions have come together, organising marches and blockades. As Darshan Pal, a protest leader voiced: ‘We want to send out a signal loud and clear. We will not tolerate the repressive measures unleashed by the government against farmers…’

The new market system, rushed into law by Modi, has created pockets of unregulated space. Private buyers will favour large-scale farming units who can deliver ‘large volumes with minimal friction’, which directly contradicts the Indian system of small-scale holdings. As such, farmers, already burdened by a failing system, now have massive corporations to compete with. Therefore, farmers are protesting at reforms that only benefit India’s super-rich, which under Modi’s governance, have only been getting richer while unemployment has rocketed. In particular, fingers have been pointed at two billionaires, Ambani and Adani who are both in the Indian food business and seek to profit from this new system where private corporate businesses are allowed to muscle into agriculture.

Allowing corporations into a system is argued to be an unsuccessful method of changing a broken system. By looking at the United States, where corporate agriculture has existed for decades and resulted in declining farm incomes and catastrophic debts, it is clear that commercialisation has not been effective. As the American Institute for Agriculture and Trade Policy (IATP), said, in support of the protests: ‘what the Indian farmers are enduring now happened in the U.S. almost four decades ago.’ The Reagan administration’s ‘systematic erosion of parity prices and other deregulatory efforts’ allowed for profits for those who bought into the large-scale monoculture system and simultaneously put strain on traditional farming methods. 

Therefore, the example of the United States should showcase to the Indian government that moving to a more liberal, free market approach in order to meet the challenge of modern food production may not necessarily be the most effective approach for food security and development. The negative results of such reforms in the past might mean that these reforms could fail to make a positive impact in India and instead leave farmers at the whim of big business. 

This article continues in the upcoming issue of The Perspective Magazine, where Prime Minister Narendra Modi’s handling of this crisis is explored. The Perspective interviewed Shiney Varghese, senior analyst at the U.S. IATP, for comment on these protests, the issue of Indian agricultural practice and the potential path improvements could take. Make sure you don’t miss the next issue of the Magazine: sign up as a UPF member today!

Emily Lewis