Neoliberal reforms sowed the seeds of despair for India’s farmers

Under the cover of the Covid-19 pandemic in September, the Indian government rammed through three farm reform bills in parliament that will deregulate the country’s vast agricultural sector, allowing farmers to sell produce directly to private buyers instead of state-regulated marketplaces and enter into legal contracts with companies before planning their harvest.

Some commentators hailed it as Indian agriculture’s “1991 moment” – when India embraced liberalisation after decades under the ‘License Raj’ regime – describing the long-awaited reforms as a step towards increasing agricultural productivity. Critics like Congress party chief spokesperson Randeep Surjewala called them a “death knell” for Indian agriculture that will “subjugate the farmer at the altar of a handful of crony capitalists”.

Passage of those bills – The Farmers’ Produce Trade and Commerce Act, The Farmers Agreement on Price Assurance and Farm Services Act, and The Essential Commodities Act – have subsequently led to country-wide farmer protests and raised critical concerns over the process by which they were passed in parliament.

The measures come at a time when farmers have been demanding relief from the state for years as many have been driven further into poverty by crop failures due to climate change and plummeting prices for produce. Despite agriculture amounting to almost 18 percent of GDP, India’s destitute farmers and their interests have been consistently sidelined.

The government, led by the Hindu nationalist Bharatiya Janata Party (BJP) and Prime Minister Narendra Modi, have painted the reforms as liberatory. “These reforms have not only broken the shackles of farmers,” Modi said, “but have also given new rights and opportunities to them.”

But farmers and peasants fear that they will now be at the mercy of giant corporations, who will possess greater bargaining power to dictate prices and contract terms.

Some observers believe that the trajectory of these slew of reforms should be seen in the context of the last three decades.

According to Thomas Crowley, a doctoral candidate at Rutgers University whose research focuses on Indian political economy and ecology, they are a continuation of neoliberal policies that have been backed by both major national parties (the BJP and Congress) since India opened up its economy to the free market in the early 1990s.

Speaking to TRT World, Crowley says that such proposals “have never had mass support in India, and neoliberal reforms in the agricultural sector, which still employs more than half of India’s working population, have been particularly unpopular.”

“The policies that were most comprehensively implemented in earlier rounds of liberalisation applied to the industrial and financial sectors, around for instance, capital account liberalisation, not agriculture.”

As the market emerged as the central actor governing economic activity, privatised restructuring and deregulation policies progressively became entrenched in Indian public institutions.

While Indian agriculture was nominally shielded against the ravages of the open market prices by government policies, years of opening up to foreign imports have disadvantaged millions of farmers who could not compete with heavily subsidised products that come into India at below market prices.

The entry of agri-business titans like Monsanto and their monopolistic practices under the auspices of free trade resulted in swathes of farmers drowning in debt and an epidemic of suicides across rural India.

Crowley says that since the neoliberal turn in India, the peasantry has been faced with an ever-deepening agrarian crisis. While internally divided along caste and class lines, a handful of the richest peasants have managed to reap the windfalls of pro-market policies.

“But as the terms of trade have become increasingly unfavourable to agriculture, the vast majority of peasants have suffered, and many are trapped in unending cycles of debts.”

“This is the major driver of the farmer suicide crisis” he adds – a crisis that pandemic has only worsened.

Setting the stage for agribusiness takeover

Prior to the new legislation, farmers sold their produce to middlemen in the Agriculture Produce Marketing Committee (APMC), locally known as mandis – a government regulated marketplace – under a Minimum Support Price (MSP), the assured price the government would pay for crops.

The reforms will now remove limits on the regulation of essential commodities like cereals, onions, and potatoes except in circumstances like war or famine. The original regulation imposed stock limits as a way to prevent traders from hoarding, which will now be lifted. Nor will there be any civic court redress for farmers in the event of contractual violations.

“There is no doubt that India’s agriculture sector has been in desperate need of reform. For years, publicly allocated agricultural credit has been diverted to corporations and Agribusiness,” says Kavita Ramakrishnan, a Chennai-based labour economist who specialises in food security.

“But the way the government has gone about doing it is fundamentally flawed,” she tells TRT World.

Instead, the reforms aim to deregulate the sector without any real investment in the agricultural economy, supply chains or food networks. India’s agrarian crisis will not be solved by just pivoting towards the private sector without sturdy institutions or robust public infrastructure.

“Otherwise you create an environment for the consolidation of small actors who control everything from seed to output to consumption,” she fears.

Ramakrishnan also worries that the policies lay the groundwork for the opening of agriculture to global trade without paying attention to supporting domestic food grain production.

She points out that existing agricultural regulations, flaws notwithstanding, at least secured the interests of farmers and prevented large-scale diversion of land use towards non-food grains. In doing so, it ensured food security could be provided through institutional mechanisms.

The new laws will remove those safeguards, while putting farmers at the mercy of private traders and multinational companies.

“By dismantling it, exacerbation of food insecurity becomes a genuine risk,” she warns.

If that’s the case, then such policies will hardly be the boon for the peasantry nor the consumer as the Modi government claims it will be.

For Ramakrishnan, “it’s a recipe for the corporate takeover of the country’s food supply and relegating farmers’ livelihoods even more precarious than they already were.”

“The beneficiaries of these new policies will be domestic billionaire capitalists – the Ambanis and the Adanis” she claims, alongside transnational agri-food giants like Walmart and Cargill.

Pockets of resistance?

While now a fait accompli, India’s peasantry has not taken these unfavorable policies sitting down.

In a stunning rebuke to the government’s privatisation measures, over 300,000 farm workers and their allies last week surrounded and camped outside New Delhi to demand the withdrawal of the laws. Farmer unions along with other progressive movements across the country have joined in solidarity with the protesters, who have stated that they will continue to agitate indefinitely until the bills are repealed.

Converging with it was a nationwide general strike of over 200 million workers and farmers.

“The magnitude and uncompromising nature of the current protests suggest that the BJP may have overplayed its hand,” says Crowley.

“The BJP came to power in 2014 promising to implement various measures on behalf of farmers, but they quickly abandoned these promises,” he points out. “This is part of the reason why the farmers protesting now are so skeptical of the BJP’s claims that the new laws are actually for their own good.”

Crowley argues that one of the consequences of the neoliberal turn is that it has created openings for cross-caste and class alliances in the agrarian sphere.

“Already, we can see the support they [the farmers] have garnered from leaders of other major movements, including the anti-caste movement, the student movement, and the movement against discriminatory new citizenship laws,” he says.

What that means for a mass movement that organises for transformative change, is another question. For now there are glimmers of hope, but not much more.

“The question is whether various progressive forces can build on these symbolic gestures, and continue with the difficult work of building alliances and coalitions that can challenge an extremely well-organised, well-funded Hindu nationalist Right.”