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Indian Agricultural Development
Modi’s Big Farm Fight

Modi’s got a problem. The next big phase in his economic reform agenda requires passing a bill that would make it easier for industry to buy land on a large scale. But India’s rural farmers, normally part of Modi’s Hindu nationalist political base, are broadly opposing it. More than a dozen of them have committed suicide, including one who hanged himself in the center of New Delhi, in a dramatic act of protest that has turned the farm bill into a red hot political issue. In the midst of this firestorm, voting on the bill is being delayed. Reuters reports:

Two cabinet ministers, speaking on condition of anonymity, said the land acquisition bill, a revision to a 2013 land law, would not be brought up until the first week of May, reversing a previous line-up of legislative business.

“The land bill is a challenge for us,” one of the ministers said late on Wednesday, after several days of protests that culminated in the suicide.

Convinced that the previous land law would delay his industrial development agenda, Modi used executive decrees in December and April to loosen acquisition rules requiring 80 percent consent from landowners, but needs parliament’s approval to make the changes permanent.

The bill would permit industrial interests to make large-scale land purchases if they can get an 80 percent buy-in from the current property holders. It’s meant to encourage a shift from small-scale agriculture to a primarily industrialized system of farming. Reforms like this, along with Modi’s efforts to end government fuel subsidies, could be a key to creating and sustaining a period of hoped-for economic growth. Yet effecting these changes isn’t easy, especially given India’s entrenched rural culture.

Modi’s twin identities of liberal economic reformer and Hindu nationalist firebrand seem to be creating a lot of tension these days; this week brought another conflict, between Modi and the Hindu temples whose gold he’d like to bring out of the vaults and into the country’s monetary system. In the past, he’s been called India’s Erdogan for promoting a similar combination of nationalist identity politics and economic reformism to the Turkish leader’s. But whereas the real Erdogan is now embracing authoritarianism as the economy he revived sputters, India, and the world along with it, has to hope Modi can do better.

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  • Kevin

    It’s not really clear this land bill woukd improve economic growth or provide the political support growth should produce. Given the corruption in the bureaucracy which will administer it, and the use of violence at the local level against holdouts, this could easily turn into a mechanism to transfer small holdings to larger corporate farms run by the politically well connected. The latter might theoretically be more efficient but this will undermine the small holders’ incentives regarding land and other productivity improvements. Further, the creation of a huge new class of landless agricultural workers, many of whom will feel they were cheated out of their land, will be a huge source of political and social instability.

    • JR

      The move in the US from agricultural economy to industrial economy was extremely painful and destabilizing as well. Fortunately for us, we were born after that time so we get to reap all of the benefits of the transition, without having to pay any of the costs. Progress is awesome for future generations, it is rarely awesome for current ones.

    • fastrackn1

      “this could easily turn into a mechanism to transfer small holdings to larger corporate farms run by the politically well connected.”

      That’s what it always is, everywhere. If it was anything else I would be shocked.

      “Further, the creation of a huge new class of landless agricultural workers,”

      Serfdom….

      All around the world, the money just keeps funneling to the top….

  • ljgude

    Early on in the history of capitalism Adam Smith said that the basic tension in a capitalist economy is between agricultural and industrial capital. Industrial capital has been so dominant during the second half of the 20th century in the developed world no one notices because agricultural prices have been forced down and the surplus agricultural workers have provided the industrial laborers. Big money was made in agriculture in the US but after the civil war all farm prices fell as the needs of industry became dominant. I grew up in a farmhouse built in 1793 100 miles north of Boston built with the proceeds of the agricultural products one family could produce and take to Boston by horse and wagon. John Kenneth Galbraith pointed out that his grandfather, once he got hold of one of McCormick’s reapers, produced more food in one year that his father had in his entire life. The gains from mechanization are enormous. Without the mechanization of agriculture the industrial revolution would have been a beer hall putsch. Today, .5% of the US population produces our food; in the 50s 2%. Behind both the Egyptian and Syrian problems are countries with traditional land tenure and insufficient agricultural output to fed their populations. So Modi is going in the direction he must. How skillfully remains to be seen.

    • fastrackn1

      Of course they do need to get mechanized to some degree. It will bring down the price of food there, just like it has here. The problem is that there does not have to be a land-grab by the wealthy to make farming more efficient. There are people who enjoy being a farmer but won’t be able to because the large corporations will control everything. That is what has happened here over the last 100 years. It’s almost impossible to become a farmer here now unless you have vast financial resources.

      • Kevin

        Mechanization only adds to output if if you can create employment opportunities for the surplus agricultural labor (or have a labor shortage to start with). Can India do that?

        • fastrackn1

          “Can India do that?”

          Not easily with limited business/financial resources and 1 billion+ to people to govern.

  • Kevin

    If I remember right, industrialization in Taiwan, S Korea and rebuilding in Japan postwar was all preceded by land reform, making sure farmland was not predominantly owned by absentee landlords. These smallholders then provided capital accumulation (via taxation, postal savings, etc.) to fund industrialization as well as the political support for modernizing regimes.

    India certainly would benefit from an increase in agricultural productivity, especially if it started to lead to capital accumulation in rural areas, but will this bill actually lead to that?

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