Modi’s agrarian audacity is a big blow to urbanization

Will this boost productivity – the market or the organization? Team Modi believed that opening markets—allowing farmers to sell produce outside designated ‘mandi’ yards—was the answer. The protesting farmers thought of something else: they feared that the unusable yards would stop the purchase of grain at assured prices in the state. Modi’s reforms promised long-term purchase contracts with private buyers. It also gave rise to suspicions of exploitation by large business groups as disputes would not be decided in a civil court but by the authorities.

Elections are to be held next year in two states, Uttar Pradesh and Punjab, which have been at the fore of the farmers’ movement. With no end to the impasse, Modi lacked the will to defend his reforms. The whole package has been scrapped. While the dedication will certainly damage their ‘strong’ image, it also shows that a more organizational approach to reforms may stand a better chance than blind devotion to the markets.

Reiterating India’s success with Amul, a $5 billion dairy cooperative, could do more for prosperity than tell farmers they can sell to whomever they want. Who’s going to buy, except the government and a few big businessmen? One needs to invest in transport, warehousing, processing, distribution—and, as in the case of Amul—brand-building. The collective, with a little help from New Delhi, was able to persuade Nestlé SA to share its chocolate-making technology in the 1960s, when India did not even have a large market for it. It does now. Policies that help producers’ organizations capture more of the farm-to-fork value chain will mean better prices for farmers. At the same time, prices would be cheaper for the regular urban working class subject to the shock of food inflation. The jump in edible oil prices this year is a lesson. Palm oil importers have taken the kill, but farmers who can take a price signal to boost supplies of groundnut, mustard or other oils are reluctant to increase acreage. They don’t know if policy makers are satisfied with connecting 1.4 billion Indians through exotic cooking – or even more bizarrely, if they don’t mind ruining ancient forests in India’s northeast with palm plantations, Because a politically connected yoga guru thinks this is an excellent idea.

The choice is between good organizations and bad ones. Vested interests play a role in Punjab, where the wealthy middlemen who get the total produce from individual farmers have a major share in the status quo and the commission income from it. This means that Punjab should continue to produce rice, even if the water-scarce crop is the wrong choice for the state. The burning of paddy stubble as farmers prepare their fields for wheat contributes to New Delhi’s toxic winter air.

The Indian government is to strike a new deal that includes gradually moving more than $100 billion in annual subsidies for food, farming and rural unemployment to a basic income, empowered farmers’ groups and stronger public infrastructure, such as more efficient, less corrupt is replaced by Mandi. Yardstick. To think that the power of the markets, freed by the Three Laws, would magically solve this complex politico-economy problem, reflects naivety. By forcing his package to hug farmers and then back down – Modi has made it impossible for better-conceived reforms to get a chance.

This would delay the moment that England arrived in the middle of the 19th country and 100 years later in East Asia, when the share of farmers in the workforce fell to less than a third and urban concerns began to trample on rural interests. India’s sclerotic agricultural economy sends the poor to the cities when it should be the basis of a more secure and sustainable urban proletariat, one that can set aside the rigid customs of rural life – including the harmful caste system – And can make the society more progressive. This is the ultimate tragedy.

Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services.