No country for reforms?

It is not very often that one sees the prime minister of a country publicly tendering an apology for a job they failed to push through. But that was what Indian Prime Minister Narendra Modi did when he addressed the nation on television on the morning of November 19 to announce the decision to withdraw the three controversial farm laws.

Modi had dourly defended the three laws passed by parliament in its monsoon session 2020, and repeatedly advertised them as a major agricultural sector reform that reflect his government's appetite for pushing through hard economic decisions. The Modi-led Bharatiya Janata Party (BJP) had also derided the farmers protesting against the three laws as andolanjeevi (habitual agitators). Some party leaders even went to the extent of alleging anti-national links of the agitating farmers, and questioned the inflow of funds to fuel the year-long stir.

Why did Modi decide to repeal the three laws at a time when the sagging farm sector in India is crying for huge investments, technology, cold storage networks, a seamless market, and new marketing techniques to make agriculture a remunerative vocation and prevent the exodus of farm labourers? Most political pundits in India would have us believe that this was due to the forthcoming fresh assembly polls in Uttar Pradesh, India's most populous state, Punjab, Himachal Pradesh, Uttarakhand and Goa in less than six months. Secondly, as a section of the Indian media reported, the government was worried about the possible impact of the protracted agitation by Punjabi farmers, most of whom are Sikhs, in the state of Punjab, which borders Pakistan, as Sikh separatists abroad could tap into their resentment and once again foment terrorism in the state. The question that arises is: Did the government not realise this at the initial stage of the farmers' protest before it snowballed?

The decision to take back the three laws, particularly for the "benefit" of a majority (80 percent) of poor farmers with less than two hectares of landholding, was the second instance of the Modi government capitulating on an issue related to farmers. In 2015, a year after Modi was swept to power, he had to revoke the land acquisition ordinance after sustained pushbacks against it.

India is witnessing a clash of two contrasting politico-economic philosophies. Should the country continue to believe in the politics of freebies, doles and subsidies for its poor, or opt for empowering them through a calibrated journey on the path of reforms, which at times impose temporary hardships to adjust to the new regime? Doles and freebies don't allow the poor to come out of the rigmarole of dependence on handouts. But the other side of the challenge is how to make the reforms result-oriented and less painful so that it does not deform.

For decades, successive governments have been subsidising the poor farmers by providing cheaper electricity, diesel, fertilisers, insurance, and credit. The question is how long this process will go on. Most of the farmers, rich or poor, are exempted from income tax. If an array of subsidies cannot empower the farmers, isn't it time to revisit them? Agreed that farmers are annadata of the country and consist of the largest segment of India's electorate. But the subsidies have a cost because they are being met by the kardata through their taxes and duties paid by the minority sections of the society. The danger is against getting into the binary of annadata and kardata. It is not a case of one versus the other, but a balance between the two.

Modi desperately needs to win the battle for Uttar Pradesh, Punjab and the other smaller states in the first half of 2022, whose results would be a key marker as to which direction the wind is blowing in the run-up to the 2024 Lok Sabha election. Of particular significance is UP. It is often said that the road to power over India passes through UP, electorally the most crucial state which has the highest number of 80 seats. The traction the farmers' agitation gained in the last one year has made BJP leadership worried by the party's dimming prospects in the western part of Uttar Pradesh, which accounts for nearly 130 of the 400-odd seats in the state assembly.

In his televised address announcing the repeal of the three laws, Modi admitted that his government had failed to convince a section of farmers about the benefits of the new legislations. In fact, what has amplified is the failure to win the perception war with the farmers and a united opposition including the Congress party which, under the leadership of then Prime Minister Manmohan Singh, had originally mooted the idea of the three laws. It has often been seen that the BJP has failed to counter its rivals when it comes to street mobilisations for major reforms. The BJP has come out awfully street-shy. Politics is best fought not in TV studios and drawing rooms, and on social media, but on the streets even in this age of digital connect. No one is a better example of this than West Bengal Chief Minister Mamata Banerjee, who is known for her street-savvy image.

As was expected, the withdrawal of the three laws by the government has emboldened the agitating farmers to shift the goalposts in return for calling off the agitation. The agitators have now further upped the ante on the issue of Minimum Support Price (MSP), which emerged as the main sticking point. There was an apprehension among the farmers that allowing outside-APMC (Agricultural Produce Market Committee) trade of farm produce would lead to lesser buying by government procurement agencies in the approved mandis. The protesting farmers say the new laws would thus make the MSP system irrelevant, and they would not have any assured income from their farming.

The rollback of the three farm laws has also raised speculations about the future of reforms in other areas like labour laws, privatisation of loss-making public sector units, and the power sector. The insatiable hunger for political power triggers expediency and makes it tempting to give up on convictions. That is where the political slide begins. After being in power for a decade, the BJP could well see its unravelling with the withdrawal of the three farm laws. That Modi sought apology while deciding to withdraw the three laws shows how much he is ready to bend for electoral gains, which are non-existent yet.

The report card of the government's handling of the economy has been far from encouraging ever since the high GDP growth of 8.3 percent in 2016-17. The growth rate fell in the subsequent three years, and the decline began even before the country was battered by Covid-19.

There is no guarantee that the repeal of the three laws will help the BJP achieve its electoral objectives of checkmating the ruling Congress in Punjab or countering the rivals in UP. There is no reason to assume that public memory is short, and the four to five months before the next round of assembly elections is a long time in politics. Those five months are numerically—if not politically—shorter than the last one year when the BJP was seen going the whole hog, championing the three farm sector laws as part of big-ticket economic reforms. What will happen to Modi's much-vaunted development agenda if GDP continues to stutter? Some analysts apprehend that failure on the economic front may even prompt the ruling party to increasingly turn to a divisive agenda in elections.

Pallab Bhattacharya is a special correspondent for The Daily Star. He writes from New Delhi, India.