Why are Indian farmers back on the streets?
Two years after calling off one of the most significant protests in India's recent history, farmer protests are now back with many of the same demands.
It was December 2021 when Indian farmers — primarily from the original green revolution regions — called off their 16-month protest after strongman Prime Minister Narendra Modi accepted their demands. The usually belligerent Modi offered a rare apology to farmers while announcing that all their demands would be met.
But farmers are now back. They are accusing the government of not acting on those demands. On Tuesday, thousands of farmers, primarily from Punjab, began a march to Delhi. Modi’s party does not want a repeat of the 2020-2021 protests and its government in Delhi’s neighbouring state of Haryana brought forth the might of the state to stop the contingent from crossing its borders.
Farmers have been met with barbed wire, cement blocks and spikes on roads to stop their progress. The police also fired rubber bullets and the Haryana police became the first police force in India to use drones to launch tear gas shells.
There are key ways in which this farmer protest is different from the one that began in 2020, as this helpful explainer by The Indian Express points out. But, it is also similar in its demands.
Reasons for the protest
To begin with, farmer organisations have said that some of their demands from the previous protest haven’t been acted upon despite Modi’s promise.
One of the key demands — repeal of the controversial farm laws — was met. But another major demand of the 2021 protest was that minimum support prices — a government-guaranteed price for crops if the market price falls below it — be made a legal right.
The central government has failed to act on this. A committee was set up to look into the demand. It has held 37 meetings and workshops but has not provided any recommendations.
The key is in the prices
The demand of farmers to make MSP a legal right goes back several years even before the beginning of the 2020 protests. They have been steadfast in their demand because the MSP regime has failed to fulfil one of its fundamental roles, that of being the floor price.
The idea of minimum support prices is to ensure that the market prices of the 23 crops for which they are declared do not fall below MSP. If they do, the government will step in to purchase produce from the farmers at MSP.
But, as reported by several journalists, over the last few years prices for many crops have been well below MSP. Every season, there are multiple reports from across India of farmers having to sell their produce below MSP.
In 2020, yours truly and the insurmountable Dheeraj Mishra resorted to data analysis and found that several of the major crops protected by MSP were selling for far less than their minimum prices. We found that farmers across India had suffered losses totalling Rs 1,900 crore (or Rs 19 billion) in just two months.
So, farmers argue that there is no point declaring higher MSPs every year if there is no mechanism to ensure that farmers don’t have to sell below those prices. That is why they are demanding that MSP be made a legal right. A government body whose recommendations form the basis of MSP announcements had also made the same recommendation in 2018.
It said, “The main challenge would be to ensure that farmers receive at least the announced MSP and India is able to retain its competitiveness in world markets.”
The problem of incomes
Even though India has consistently been one of the fastest-growing large economies in the world, that growth has been remarkably unequal.
A recent analysis by India’s preeminent agriculture economist Ashok Gulati shows that real rural wages (that is rural wages adjusted for inflation) declined in the last five years. The annual growth rate of real rural wages between 2019 and 2024 has been -0.6 percent for agricultural wages and -1.4 percent for non-agricultural wages. Not only have rural wages been lower than those in urban areas, inflation has been higher in rural areas.
A recent paper by Isha Gupta noted that rural distress is visible also in weakening rural demand. Her analysis shows that the crisis cannot only be attributed to the pandemic and inflationary pressures but dates back to the demonetisation period. That was also around the time when farmer protests picked up steam across India.
Pro-consumer bias
One of the structural reasons why farm incomes have been a problem in India, as in many parts of the world is the pro-consumer bias of governments. High food prices are politically very damaging. Rising prices of onions have been accused of contributing to the collapse of governments in India (in 1980 and 1998).
Every government in power wants to keep food prices in check. The current government — despite its extraordinary majority — is no different. Despite Modi’s image as a pro-market reformer, his government has intervened in the markets time and again when prices of key crops have gone up.
In 2022 and 2023, the government banned the export of both wheat and rice — India’s key staples — when prices started rising. Not only that, in 2023 when prices of wheat were above MSP, the government sold 3.4 million metric tonnes of wheat at well below the cost of production to bring the price back to MSP levels.
So, on the one hand, the government does not intervene in scenarios when the prices of crops are below MSP. But is extremely quick to intervene on the rare occasion that prices inch above MSP, not allowing farmers to benefit from higher market prices.
Measures like these are an implicit tax on farmers. A report last year by the Indian Council for Research on International Economic Relations said that these steps resulted in a loss of Rs 40,000 crore (Rs 400 billion) to farmers.
Climate change
A key component of almost every conversation about agriculture around the world — and there are several that are ongoing at the moment — is climate change. The rapidly warming climate is causing a reduction in yields, increase in pests and diseases, loss of livestock, shorter growing seasons and lower availability of water.
Things aren’t different in India. In the last couple of years, climate change has impacted the production of both of India’s main crops — rice and wheat.
Protesting farmers are demanding a reform of the central government’s crop insurance scheme, which was designed to ensure that farmers are protected in the event of crop loss because of weather impacts but has been plagued with problems ever since its implementation.
Trust deficit
A key factor also is that farmers simply don’t trust Narendra Modi’s government. The government strongly reinforced this today by treating them as invaders and not protestors.
In 2020, I wrote this piece about how the government has repeatedly broken its promises made to farmers.
One key promise that has also been broken since then is that of doubling of farmers’ incomes by 2022. In 2016, Modi said, “my dream is that by 2022, when the country celebrates its 75th independence day, the income of farmers should double.”
On the contrary, as Gulati’s analysis shows, farmers’ incomes have declined.