What is the biggest political economy takeaway from the 2017 Gujarat elections? The schism between India and Bharat is for real. The BJP’s victory is only due to its dominance in urban areas. The Congress has won a majority of the 126 rural assembly constituencies. This is not a fluke. Multiple factors such as deficient rainfall, a crash in the price of crops such as cotton and groundnut etc. have hurt farm incomes in the state in the last few years.
Farm distress is not confined to Gujarat alone. The economic viability of farming is increasingly coming under stress. Uncertain rainfall and price fluctuations can make things even worse in bad years. The first two years of the Modi government were rainfall deficient years. Demonetisation and GST are bound to have put a squeeze on farm incomes as well. Perishables suffered a sharp crash in prices after demonetisation. Most of agricultural business in India has been traditionally conducted in the informal sector (read: outside the tax net). GST is bound to have changed that. A growing clamour for farm loan waivers across states is proof of entrenched rural distress in the country. The Congress had promised one in Gujarat. It performed well in rural areas. Same was the case with the Congress in Punjab and the BJP in the Uttar Pradesh assembly elections held earlier this year.
Barring Karnataka, it is the BJP which would be facing rural anti-incumbency in upcoming major state elections and the 2019 general elections. The next budget will probably do something to protect the ruling party from the now palpable rural discontent. One can expect more loan waivers and a hike in minimum support prices. While such policies do bring temporary relief, they are not enough to address the structural crisis of Indian agriculture. Growing fragmentation of land holdings, environmentally unsustainable practices in groundwater and fertiliser use, and climate change are some such factors. Indian farmers do not have income protection or social security cover unlike their counterparts in the west.
{{/usCountry}}Barring Karnataka, it is the BJP which would be facing rural anti-incumbency in upcoming major state elections and the 2019 general elections. The next budget will probably do something to protect the ruling party from the now palpable rural discontent. One can expect more loan waivers and a hike in minimum support prices. While such policies do bring temporary relief, they are not enough to address the structural crisis of Indian agriculture. Growing fragmentation of land holdings, environmentally unsustainable practices in groundwater and fertiliser use, and climate change are some such factors. Indian farmers do not have income protection or social security cover unlike their counterparts in the west.
{{/usCountry}}The younger generation in farmer households is even more worried about its future. A 24 year old Hardik Patel emerging as the leader of a powerful but disgruntled farming community is the biggest proof of this. Given the fact that almost half of our workforce is still dependent on farming; such policies are bound to be prohibitively expensive. This is the biggest fault line in India’s political economy. Bharat needs a lot of resources to come even close to the living standards that India enjoys. India is hard pressed to marshal them. Political fortunes are a function of the ability to balance this contradiction.