Elections trump economics in Modi's farm reforms U-turn

Elections trumped the urgency for agricultural reform in Indian prime minister Narendra Modi's surprise decision on Friday to repeal new farm laws, economists and political analysts said.

Although far from perfect, the three laws passed in September 2020 which Modi now plans to scrap would have made a start at liberalising India's enormous but hugely inefficient farming sector.

"The government has made an electoral calculation," professor Harsh V Pant, an Indian author and analyst, told AFP.

Modi "instinctively, intuitively" felt the political costs of his reforms were higher than their economic benefit, he added -- making the subject "untouchable" going forward.

"If even Modi, with his electoral mandate, is struggling, then I don't think anyone in the near future will be able to get the same mandate or tackle these issues," he said.

India's agriculture sector is vast, with two-thirds of the 1.3 billion population relying on farming for their livelihood. But it is a mess.

Several hundred thousand Indian farmers have been driven to suicide in the past three decades by crippling poverty, debt and ever more erratic weather patterns caused by climate change.

Huge volumes of produce rot before they reach consumers and experts say that in many areas farmers are growing unsuitable crops, guzzling up groundwater at unsustainable rates.

In northern India, farmers burn the residue from rice paddy across huge areas, blanketing the capital New Delhi and other towns and cities in a sickly cloud of toxic pollution every year.

The new laws aimed to allow farmers to sell their produce directly to private companies at mutually agreed prices, and anywhere they could find a buyer.

The government said it would open up competition and encourage farmers to not just rely on subsidies, but to become more competitive by adopting more efficient farming methods.

But that meant breaking up the decades-old monopoly of state-controlled agricultural markets that buy at set minimum prices.

And the prospect struck fear into the hearts of many farmers, who saw the reforms as leaving them at the mercy of big agribusiness corporations who would squeeze them for every last rupee.

Last November tens of thousands of them, egged on by opposition parties, headed for Delhi and -- after ugly clashes with police -- camped out on the outskirts of the capital where they remain today.

In January they gatecrashed Indian Republic Day celebrations, running riot in Delhi on their tractors and raising a flag at the historic Red Fort. Hundreds of police officers were injured.

Suddenly Modi -- voted in on a platform of supporting ordinary people but also as a reformer -- was facing his biggest political challenge since his Hindu nationalist government came to power in 2014.

After taking a beating in May elections in the eastern state of West Bengal, Modi's Bharatiya Janata Party (BJP) started to worry about votes due in five more states early next year.

They include Punjab, governed by the Congress party of the Gandhi dynasty, and the currently BJP-run bellwether state of Uttar Pradesh. Both are home to enormous numbers of farmers.

And analysts say that Modi's move was unashamedly driven by his party's political interests.

"Obviously, this decision puts electoral politics front and centre," Nistula Hebbar, political editor with The Hindu, told AFP. "The BJP under Modi is willing to be very pragmatic for its electoral success."

"If they lose UP everything will be bad for them going forward -- from the morale of the party supporters, the opposition's morale, the election of next Indian president and Modi's 2024 reelection bid," she added.

It is only the second major U-turn the firebrand Modi has carried out since his election, after he dropped plans to reform rural land titles in 2015, also following huge protests by farmers and other countryside-dwellers.

Satish Nambardar, an official with one of the farmers' unions behind the current demonstrations, said: "He took a one-man decision to introduce the laws and now he's taken a one-man decision to take them back."