Stalemate between the Indian government and the protesting farmers’ unions remain s unchanged despite 11 rounds of talks. The farmers view the new farm laws as a ploy to dispossess them of their land holdings and give a free hand to tycoons to grab farmers’ holdings, though small.
Protesters allege the new laws were framed in secret understanding with tycoons. The farmers have reason to abhor the rich businesses. According to an a January 2020 Oxfam study, India’s richest one percent hold over four times the wealth of 953 million people who make up the poorest 70 percent. India’s top nine billionaires’ income is equivalent to the wealth of the bottom 50 percent. The opposition has accused the government of “crony capitalism’.
The government has tried every tactic to becloud the movement (it’s sponsored by separatist Sikhs, who desecrated Republic Day by hoisting their flags at the Red Fort, and so on). The government even shrugged off the protest by calling it miniscule and unrepresentative of 16.6 million farmers and 131,000 traders registered until May 2020. The government claims it planned to build 22,000 additional mandis (markets) in 2021-22.
Unruffled, the opposition still accuse the government of being “suit-boot ki sarkar” and an ardent supporter of “crony capitalism” (Ambani and Adani). Modi did many favours to the duo. For instance they were facilitated to join hands with foreign companies to set up defence-equipment projects in India. BJP-ruled state governments facilitated the operation of mines in collaboration with the Ambani group just years after the Supreme Court had cancelled the allotment of 214 coal blocks for captive mining. Modi used Adani’s aircraft in March, April and May 2014 for countrywide campaigning.
“Crony capitalism” is well defined. Merriam-Webster defines “crony capitalism” as “an economic system in which individuals and businesses with political connections and influence are favored (as through tax breaks, grants, and other forms of government assistance) in ways seen as suppressing open competition in a free market, if there’s one”.
A common point in all the definitions is undue favours (sweetheart contracts, licences, etc) to select businesses. It is worse than nepotism as the nepotism has a limited life cycle. But, “crony capitalism” becomes institutionalized.
Modi earned the title “suit-boot ki sarkar” when a non-resident Indian, Rameshkumar Bhikabhai Virani gifted him a Rs 10 lakh suit.To save face, Modi later auctioned the suit on 20 February 2015. The suit fetched Rs, 4, 31, 31,311 or nearly 40 times the original price. Modi donated the proceeds to a fund for cleaning the Ganges. `It was subsequently alleged that the Surat-based trader, Laljibhai Patel, who bought the suit had been favoured by being allotted government land for building a private sports club.
Modi is unwilling to yield for fear of losing his strongman image and a Domino Effect. If he yields on the farm laws, he may have to give in on the Citizenship Amendment Act. Fund collection in some foreign countries has started to sustain the movement. As such, the movement may not end anytime soon. Unless Modi yields early, he would suffer voter backlash in coming elections. The farm sector contributes only about 15 per cent of India’s $2.9 trillion economy. But it employs around half its 1.3 billion people.
Miffed by opposition vitriolic opposition, Ambani’s $174 billion conglomerate Reliance Industries Ltd. categorically denied collusion with Modi’s government. Reliance clarified it had never done any contract farming or acquired farm land, and had no future plans. It also vowed to ensure its suppliers will pay government-mandated minimum prices to farmers. The Adani Group also had clarified it did not buy food grains or influence their prices.
Like Modi, both Adani and Ambani hail from Gujarat, where Modi was the state’s chief minister for over a decade. Both tycoons are reputed to be Modi’s henchmen. Their industries quickly align their business strategies to Modi’s nation-building initiatives. For instance, Adani created a rival regional industry lobby and helped kick off a biannual global investment summit in Gujarat in 2003 that boosted Modi’s pro-business credentials. During 2020, Ambani raised a record $27 billion in equity investments for his technology and retail businesses from investors including Google and Facebook. He wants to convert these units into a powerful local e-commerce rival to Amazon and Walmart. The Adani group, which humbly started off as a commodities trader in 1988, has grown rapidly to become India’s top private-sector port operator and power generator.
Ambani and Adani are like America’s Rockefellers and Vanderbilt’s in the USA’s Gilded Age in the second half of the 19th century. The Modi government’s patronage of the Ambanis and Adanis is an open secret. Kerala challenged Adani’s bid for an airport lease. A state minister said last year that Adani winning the bid was “an act of brazen cronyism.”
Farmers who could earlier sell grains and other products only at neighbouring government-regulated wholesale markets can now sell them across the country, including to big food processing companies and retailers such as WalMart.
The farmers fear the government will eventually abolish the wholesale markets, where growers were assured of a minimum support price for staples like wheat and rice, leaving small farmers at the mercy of corporate agri-businesses.
The farmers have a logical point. Agriculture yield less profit than industry. As such, even the USA heavily subsidies its agriculture. US farmers got more than $22 billion in government payments in 2019, the highest level of farm subsidies in the last 14 years, and the corporate sector paid for it. The Indian government is reluctant to give a permanent legal guarantee for the MSP. In contrast, the USA and Western Europe buy directly from the farmers and build their butter and cheese mountains. Even the prices of farm products at the retail and wholesale levels are controlled by the capitalist government. In short, not the principles of capitalization but well-worked-out welfare measures are adopted to sustain the farm sector in the advanced West.
The farmers would suffer double exploitation under a monopsony (more sellers less buyers) at the hands of corporate sharks. They would pay less than the minimum support price to the producers. Likewise, consumers will have to pay more because the public distribution system is likely to be undermined as mandi (regulated wholesale market) procurement is would eventually cease.
The heavily indebted Indian farmer has average income of only about Rs. 20,000 a year (about Rs 1666 a month). Thousands of farmers commit suicide by eating pesticides to get out of financial difficulties.
A study by India’s National Bank for Agriculture and Rural Development found that over half of Indian farmers are in debt. More than 20,000 people involved in the farming sector committed suicide from 2018-2019, with several studies suggesting that indebtedness was a key factor.
More than 86 percent of India’s cultivated farmland is owned by small farmers with under two hectares. These farmers lack acumen to bargain with bigger companies. Farmers fear the Market Support Price will disappear as corporations start buying their produce.
Modi is unwilling to yield for fear of losing his strongman image and a Domino Effect. If he yields on the farm laws, he may have to give in on the Citizenship Amendment Act. Fund collection in some foreign countries has started to sustain the movement. As such, the movement may not end anytime soon. Unless Modi yields early, he would suffer voter backlash in coming elections. The farm sector contributes only about 15 per cent of India’s $2.9 trillion economy. But it employs around half its 1.3 billion people.
