No.s 66-67, May 2017

No.s 66-67 (May 2017)


The year 2015-16 was a second successive year of rainfall deficit; as such, it witnessed widespread rural distress, news of which eventually made its way into the corporate media. This was followed by a normal monsoon in 2016-17 over most of India, whereupon the media widely anticipated that there would be a healthy recovery on the agrarian front.

Thereafter, the northeast monsoon of October-December 2016 failed. As a result, all the southern states are now in the grip of a severe drought; Tamil Nadu in particular is suffering the worst drought in living memory.

No doubt, production did recover in the majority of states during 2016. Nevertheless, the long-term factors causing distress in India’s agrarian scene have not gone away. In the following article, we look at some aspects of this continuing distress. We make the following points:

(i) The latest Budget (2017-18) has reiterated the previous year’s claim that the Government would “double” the income of farmers in five years. However, neither Budget shows an increase in allocations for agriculture, as a percentage of Gross Domestic Product (GDP). Allocations for rural employment have risen due to large-scale distress, but remain around 0.3 per cent of GDP.

The Prime Minister’s avowed aim of “doubling” farmer income in five years is meaningless if doubling is meant in nominal terms (i.e., without discounting for inflation). If he is talking of doubling income in real terms in five years, it is nonsensical, the more so because of the miserly budgetary allocations actually being made.

(ii) After the NDA government (1999-2004) ushered in an acute agrarian depression, the post-2004 period saw a spell of rise in agricultural growth, due to two factors. Firstly, the UPA government, which owed its election to peasant anger with the NDA, introduced a set of policies which revived agriculture and rural employment to some extent. Secondly, a global economic bubble lifted the prices of agricultural commodities worldwide (a part of which raised returns to cultivators), and increased demand for unskilled labour in the construction industry (raising urban and rural wages, which are now an important component of the income of a peasant household).

(iii) Even during this period of higher growth, however, the crisis of the peasantry did not get resolved, but was merely alleviated for some time and to some extent. The vast majority of the peasantry continued to eke out a precarious existence, and were deep in debt, a sizeable share of which debt was owed to moneylenders and traders.

As the UPA-II government went into fiscal deficit-cutting (i.e., demand-suppressing) mode after 2010-11, and as the global commodity prices boom ended, negative trends in India’s agriculture revived – declining investment, slowing rates of growth, worsening terms of trade, falling real wages, and rising peasant suicides. These negative trends were carried forward and intensified under the Modi regime.

As the Government now reduces its overall expenditure/GDP ratio in the midst of a recession, it further suppresses aggregate demand; this in turn depresses already depressed peasant incomes. These demand-suppressing policies indeed echo the colonial policies of the 1930s, which drained the meagre savings of the peasantry into Britain’s gold reserves. In this context, a few increased budgetary allocations for individual heads of agriculture, and tall talk of doubling farmer incomes, are a mockery.   

(iv) Contrary to the Finance Minister’s claims, the opening up of marketing of food products to 100 per cent foreign direct investment (FDI), announced in the 2016-17 Budget speech, will not help small producers of vegetables and fruit. Wild claims of very large waste in India’s vegetable and fruit supply chain have turned out to be false, and so too the assertion that corporate investment would eliminate such waste. Even moderate public sector investments and interventions in the horticulture sector could have yielded benefits for both small producers and consumers; but this course is ruled out, since the Government’s priority is to create business opportunities for foreign and other private corporate investors.

Large-scale foreign investment in the sector may take time; it awaits a comprehensive and explicit policy of Government non-intervention in agriculture. This demand of foreign investors, and the actual large-scale entry of FDI into the sector, would have very severe negative effects, among them the displacement of small peasants.

(v) The Government is trumpeting its new crop insurance scheme. While the new scheme’s provisions are an improvement over the existing miserable scheme, and it is likely that the Government will massively expand coverage under the new scheme, the real point lies elsewhere. That is, the scheme is to prepare the ground for the Government in future to wash its hands of responsibility for providing relief and compensation to calamity-affected cultivators. In other words, it is part of a broader policy of State withdrawal and financialisation of social claims, which can be found with respect to other sectors as well, such as health.

(vi) Once we see through the hype of ‘farmer-friendliness’ surrounding this Budget, we find there is no real thrust given to public sector investment in agriculture. Even establishment economists accept that public sector investment crowds in private investment in agriculture; that investment in agriculture accelerates output growth and raises productivity; and that improved agricultural output is the most effective way to reduce poverty. However, there has been a steady decline in the share of the public sector in agricultural investment.

Climate change, the effects of which appear to already be upon us, which effects are certain to intensify, lends added urgency to the need for public sector investment. Only the most helpless intellectual slaves of the free market ideology could imagine that private investors can sufficiently prepare the peasantry for the impending changes.

(vii) Ultimately, all ruling class programmes to address the agrarian distress, even those variant strains that give importance to public spending, separate the question of repairing “agriculture” from question of addressing the crisis of the peasantry that works it. They ignore the scope for the peasantry as an agent for the transformation of agriculture; indeed the dominant strain treats the peasantry as the main obstacle for such a transformation.

Nor should one expect otherwise, given the transformation they are seeking. It is up to those seeking a different form of addressing the agrarian crisis to take as their starting point the peasantry, particularly the small, marginal and landless, and locate the obstacles to the release of their productive, organisational, collective and transformational capacities.


NEXT: I. The Modi Government’s Attempt to Project a Pro-‘Farmer’ Image


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