Listen to the companion podcast here!
The national average income (including from non-farm related sources) in agriculture in India is roughly 10,000 rupees (164 Canadian dollars) per month. In some regions, the amount is less than half that. Accounting for only farm related activities, the daily income of farmers comes down to only 27 rupees per day, and more than half of India’s farmers are in debt, according to the latest statistics available.
India’s Prime Minister Narendra Modi promised “Sabka saath, sabka vikas” (“Support from all, development for all”), yet farmers felt that their needs are consistently overlooked by the central government. So, they took to the streets in protest in 2024, as they had in 2017 and again in 2020-21, following the passing of contentious farm bills that were later repealed.
Political disagreements between government and farmers in India
The 2020 farm bills can be separated into three main Acts: Essential Commodities, Trade, and Price Assurance. These acts set out to define the meaning of “essential commodities” and create a system for the quantities of goods held and their prices, privatize agricultural trade, and allow for companies to privately farm through contracts and deals. While these bills allowed for widespread production and trade of produce to both consumers and businesses alike, farmers claimed markets would hoard produce, raising prices.
On the surface, the deregulation of the wholesale system freed up the agricultural market, but also threatened mandated price floors. This allowed for crop pricing to be severely undercut within the new direct-to-business model, further threatening farmer livelihood. Farmers compared this situation to the 1998 deregulation of the sugar industry, which proved to have no productivity benefits for farmers, and did not boost income or infrastructure.
As with the sugar industry reforms, produce farmers thought of these current bills as favouring the “pro-corporatism” mindset, and against the best interest of local farmers whose livelihoods relied on agriculture. Agricultural development was pushed aside and farmers were suffering. Hence, beginning November 2020, these farmers, mostly from the states of Punjab and Haryana, took to the streets in protest, demanding these bills be repealed.
Devinder Sharma, an agricultural policy analyst and writer, said that these issues are deep rooted in flawed economic planning beginning decades ago. I spoke with him via Zoom to gain a broader perspective on the issue.
“Roughly 50% of the country’s population earns from agriculture,” he said. To give a perspective of the size of India’s farming population, he said that, with a population of 1.3 billion people, that means that around 650 million livelihoods dependent on agriculture. In comparison, the entire population of the United States would make up only a little more than a half of India’s farming population.
The economic crisis of 1991
By the turn of the decade, India had begun to pile up severe debt and found it increasingly difficult to balance payments. Trade had slowed to a crawl and borrowing was becoming harder to finance. As a result, under Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh, the Indian economy liberalized and began a considerable reform process.
While these reforms did greatly benefit industry, Mr. Sharma said that policymakers failed to recognize that 60% of India’s population was dependent on agriculture at that time. Today, the share of GDP from agriculture is only 15%. “The idea that more people in agriculture equates to less economic growth is an outdated way of thinking,” said Mr. Sharma, angry at the policymakers’ blunders in recognizing the importance of agriculture in the Indian economy.
However, senior economist Dr. Nilanjan Banik offers a different perspective. A program director and professor of economics at Mahindra University in Hyderabad, he is an expert in development economics and econometric analysis. As I had done with Mr. Sharma, I spoke with Dr. Banik via Zoom.
“In terms of the overall pie, the economy is doing great,” said Dr. Banik, referring to the economic growth as India moved from agriculture to manufacturing. During the time of the 1991 reforms, while 60% of the country was dependent on agriculture, it only accounted for 25% of the GDP. Today, as 50% of the country is dependent on agriculture, the proportion of GDP has dropped to 15%.
The catalyst of this was the signing of the trade agreements in agriculture in the 90s. This pushed the industry’s growth to be more market driven than state driven. Hence, as the industry became more and more privatized, eventually a slump was caused in the international pricing of agricultural goods, reaching its trough in 1997. These reforms proved nonexistent in the 1990s when compared with the 1980s.
Furthermore, the share of agriculture within the composition of goods being produced in India decreased as well. “It is going to be a natural progression as agricultural workers move towards labor and industry,” Dr. Banik said.
What can the government do?
It is not like these issues are just now getting called to national and international attention. Director Shyam Benegal’s 1982 parallel film Arohan (Ascent) calls to attention the plight of impoverished farmers under various political regimes. Ultimately, as shown by Benegal, it is about the wage gap and large societal divide that plagues agriculture.
“This income gap has nothing to do with farmers in general,” said Dr. Banik. There are three different classifications for the types of farmers overall. Small farmers have less than 1.5 hectares of land, mid-sized farmers have around 5 hectares, while large farmers have more than 10 hectares. Around 83% of farmers in India are small and marginal farmers. Only 5% of Indian farmers are large farmers, most of which are predominantly from Punjab and Haryana only.
Another issue is the topic of guaranteed pricing. Another request of farmers protesting now is a minimum support price (MSP) for all produce goods. Mr. Sharma angrily noted that, “if you buy a pen, it has a price, if you buy medicine, it has a price, if you buy a watch, it has a price.” In my conversation with him, he further questioned: “Why is it that it is only agricultural produce which does not have a price tag?”
Dr. Banik offers an answer. “Once again, MSP is being demanded primarily by the large farmers in Punjab and Haryana.” In those two states, the water table has been falling. Hence, the government wants to move away from water guzzling crops, such as rice. Coincidentally, rice is one of the most grown crops in those two states, alongside wheat (another high water requiring crop). Hence, to incentivize other types of crops, the government wants to move away from the public system of procuring and distributing. Hence, a part of the protests are being facilitated by a fear of privatization and big corporate houses amongst the large farmers.
This is why Dr. Banik stated that the movement of labor from agriculture to industry in big cities should be facilitated and encouraged. However, Mr. Sharma told me that this was “sheer exploitation” of farmers by the urban planners.
The farmers’ crisis today
Alongside this movement away from a more public agricultural system, nothing is being done to compensate the farmers already experiencing losses either. From 2000 to 2016, Indian agriculture suffered a loss of over 700 billion CAD, meanwhile any and all support for farmers was ignored. It is only in the agricultural sector that such losses are ignored by the government, angrily explains Devinder Sharma: “If other industries had suffered even [a fraction] of that loss, everybody would have called for stimulus packages.” Ultimately, Mr. Sharma, as well as many other policy analysts, is appalled at the lack of attention farmers in India are still receiving from the government even today.
Dr. Banik, on the other hand, said that the government is simply assisting this natural progression of the movement of labor towards manufacturing. He claimed that because the government is focused on industry as the primary pillar of growth, very little can be done for agriculture through politics and policy. Hence, Dr. Banik encouraged the local state governments to start/continue with their land sharing programs and infrastructure development opportunities as opposed to handing out stimulus checks. This is to ensure the stability of farmers which are yet to move into industry.
“The act of procuring and distributing is costly” says Dr. Banik, defending the incentivization programs the Indian government set into place to promote manufacturing. “That is why you will find more and more people moving out from the agricultural sector in India and into manufacturing and even real estate, as that is also booming.”
However, agriculture is not the only industry facing high inflation. This real estate boom has been met with sharp increases in pricing as well. Mr. Sharma says that blaming the economic shortfalls on rising prices of vegetables is immaterial when housing prices are going up by hundreds of thousands of rupees. “Ultimately, agriculture is suffering from a livelihood issue, and it is important that flawed economic planning is erased first,” he said when asked how the government should respond to ensure the rights of farmers are protected.
For his part, Dr. Banik said, “The only thing which has to do with the system is to ensure that people are organically moved from agriculture to non-agricultural activities.”
Feature photo of woman spreading fertilizer courtesy of EqualStock IN. CC2.0
