It didn’t last long enough to turn public attention away from more weighty matters like cattle trade and peacock tears, but nevertheless, the two-day ‘strike’ by farmers in Maharashtra ought to have politicians and policymakers worried everywhere. That is because when the Indian farmer decides to take collective action, there is really no way to counter it.
Chaudhary Charan Singh demonstrated this way back in 1978. His ‘kisan rally’ remains the largest gathering witnessed in Delhi’s Boat Club lawns to date. It was an awesome display of political power which propelled him — howsoever briefly — into the Prime Minister’s office.
Mahendra Singh Tikait demonstrated it again a decade later at the same venue. Half a million farmers squatting on the lawns off Rajpath soon brought the Rajiv Gandhi government to its knees, which accepted Tikait’s long charter of demands, ranging from higher price for sugar cane to waiving of electricity dues.
More recently, the Jats of Haryana once again demonstrated the might of farmer power, seeking ‘Backward Class’ status — and associated reservations in jobs and education — for themselves by coming out into the streets.
So, it is hardly surprising that the Devendra Fadnavis government had to cave in, in a span of just two days. With fruit and vegetable prices soaring 50% and faced with an imminent milk shortage, the Fadnavis administration bought peace by agreeing to waive the loans of “small and marginal” farmers — nearly 80% of the State’s 13.7 million-strong farmer population — as well as waiving interest and penalty on pending power bills.
The government also agreed to hike the procurement price of milk — though perhaps not to the ₹50 per litre farmers demanded — and promised to bring in legislation to make procurement of agricultural produce at prices below the Minimum Support Price (MSP) a criminal offence. It also agreed to set up a State-level commission on agricultural costs and prices.
Of course, the ruling party has accused middlemen of machinations to jack up prices (quite true) as well as the Shiv Sena and the Nationalist Congress Party of political shenanigans (also quite true), but that shouldn’t distract us from the real takeaways from this episode.
The first one is this: when the Indian farmer is roused enough to march on the streets, it is almost impossible for any government to counter it. That is what 65% of the population means. Faced with large-scale farmer protests, Rajiv Gandhi’s Congress caved; the Janata Party caved; the UPA caved and, now, the BJP has caved in — in Haryana and Maharashtra.
The second is this: unless the powers that be stop merely paying lip service to agrarian distress and actually double down efforts to find meaningful solutions, we are looking at potentially much larger, much more impactful uprisings in times to come.
A distorted subsidy regime
It is paradoxical that agrarian distress has risen even as agricultural output has grown. There are many reasons for this. At the core is a distorted subsidy regime which has pushed cereals in favour of oilseeds and pulses, and water or input-intensive cash crops like sugar cane or cotton in areas which are agro-climatically not suited for them. On the other hand, with rising incomes, education levels and prosperity, the nature of food demand has also changed. India’s per capita cereal demand, as Credit Suisse’s Neelkanth Mishra pointed out in a recent article, has been declining by 1% a year for the last 30 years. This means that domestic demand for cereals isn’t growing any more — while output, even in bad monsoon years, has risen.
Farmers continue to grow cereals, tempted by rising MSPs. Procurement, faced with growing grain mountains and tightening of subsidies, has reduced, except in traditionally strong agri-markets like Punjab, Haryana and Madhya Pradesh.
This forces distress sales at below MSPs, as was also seen in the case of toor dal this year. Last year’s record price surge forced the government to announce higher MSPs and incentives. However, an immediate and overwhelming response from the farmers found it unable to actually procure at the promised support price, leading to distress sales, and a continuing cycle of rising agricultural debt and unpaid bills.
In Maharashtra, for instance, one of the subsidiary demands was to stop ‘harassment’ by microfinance companies, which leads me think that another Andhra Pradesh-type crisis may well be brewing there.
This in turn triggers demands for loan waivers and other write-offs. Yogi Adityanath set the ball rolling with a loan waiver in Uttar Pradesh — now the demand is spreading. Tamil Nadu farmers, despite a high-profile demonstration in Delhi and a half-hearted strike, have not managed to get one yet, but that is only because they haven’t yet found a forum — or a leader — they can rally behind. If Tamil Nadu finds a Tikait, the tale would unfold quite differently.
The point is, given the manifest shortcomings in execution capability, and the limits on capacity, state intervention — of the type which Fadnavis and the Yogi have preferred — can never really solve the problem. There isn’t enough capacity and there isn’t enough money.
What needs to be done instead is to find holistic solutions — actual, rather than theoretical access to credit, lifting of market access controls, better rural infrastructure, affordable and reliable power supply and a crackdown on middlemen. Otherwise, it may not be milk that flows down the streets the next time around.
