Terms of Trade | Cooperatives: BJP’s latest rural challenge to the opposition

With its push for cooperatives, the BJP has the potential to deepen its political strength across rural India and weaken the finance muscle of other Opposition parties. It also makes sound economic sense.

On February 15, the union cabinet announced the beginning of a programme to create Primary Agricultural Cooperative Societies (PACS) in all Indian villages. While this was formally announced in the Budget speech on February 1 itself, the news did not gather much attention, perhaps because it did not have much in terms of budgetary allocations. But the political economy implications of the decision can be far-reaching.

To be sure, cooperatives are only as good or bad as the larger socio-political ecosystem around them. (PTI)

This is best explained by a recap to 2021 when protests against the (now-repealed) three farm laws were at their peak. While the government’s decision to repeal the farm laws surprised many, it was more than clear that the Bharatiya Janata Party (BJP) was on the political backfoot.

This was especially true in the green revolution states of Punjab, Haryana and western Uttar Pradesh (UP), which have had a history of strong peasant politics. The predicament was the most visible in western UP where an otherwise political lightweight Rakesh Tikait was able to mobilise the Jat peasantry, most of whom had been loyal supporters of the BJP in the 2017 and 2019 assembly and Lok Sabha elections in Uttar Pradesh. In fact, it can be argued that the climbdown on the farm laws was a tactical move to make sure that class identity did not drown the socio-religious identity-based loyalty the BJP had cultivated in western Uttar Pradesh.

The BJP’s political strengths - and weaknesses

Where does the decision to push for a universal PACS coverage in Indian villages come here?

The BJP’s political appeal, to put it somewhat simplistically, rests on three key pillars today. First is its core voter base, which has an ideological affinity to the wider Hindutva agenda of the Rashtriya Swayamsevak Sangh (RSS) and its various offshoots. The second is the vote base the BJP has cultivated by political weaponisation of its welfare schemes. It helps they are linked to the political persona of Prime Minister Narendra Modi. The third element of this structure is the BJP’s appeal among the upwardly mobile urban middle class and big capital who see it as the most committed and, if need be ruthless, engine of building Indian capitalism. Of course, the third is important not just for votes but also political funding.

While this strategy has worked well for the BJP so far, it is far from invincible as far as electoral contests go. Potential vulnerabilities are most likely to come from two routes.

The first is the quintessential caste question in India. The BJP’s core support base includes the upper caste population in the Hindi speaking states. On their own, they cannot win any party an election. Sure, it has won over a large part of the non-dominant Other Backward Caste (OBC) vote by accusing Mandal based parties of acting in a sectarian manner and cornering all benefits for dominant OBCs. However, there are examples such as the 2015 election in Bihar that show that OBCs can ditch the BJP to join a broader Mandal coalition.

The other weak spot for the BJP is a realignment of political partisanship on a class-basis. This is where things such as the farmers’ protest and even employment related protests worry the BJP the most. Because it is already in government and its grassroots workers tend to rely more on Hindutva rhetoric and Modi’s political persona, the BJP struggles to engage with a class-based anti-incumbency. Even schemes such as PM-Kisan are more attractive for the poor farmer than the relatively prosperous medium farmer, who will not be as obliged with the various welfare schemes the BJP has to offer. Offering benefits such as a guaranteed Minimum Support Price (MSP) to placate this constituency is in direct conflict with the government’s commitment to fiscal conservatism.

The political logic of PACS

How will formation of cooperatives help the BJP here?

First, it will offer the party an institutional entry point in the village level political economy discourse. Given the fact that the BJP is perhaps the only cadre-based party at the all-India level, it is almost a given that it will make every possible attempt to gain overwhelming leadership of these PACS at every level. Once this exercise is complete, the BJP’s claim of such people being a credible voice of the farmers will be more difficult to dismiss. It is also very likely that the government will route a lot of its future funding and schemes towards agriculture via these organisations. This will only add to the authority of the leadership that controls these cooperatives.

Second, the formation and formalisation of PACS will also help the BJP in weakening the rural muscle that some opposition parties enjoy thanks to their dominance in rural cooperatives. The Nationalist Congress Party (NCP) in Maharashtra sugar cane belt is a good example of this. While this is not to demean existing cooperatives, it is a fact that they are also an important cog in the wheel of generating political funding and even acting as a cleaning agent for unscrupulous political funding. Such activities will become increasingly difficult in the future as the centre streamlines the functioning and database of PACS.

The economic rationale

Lest this column starts sounding like a conspiracy theory ascribing only political motives to the formation of PACS in every Indian village, it is important to state upfront that this author sees the cooperative model as the only viable strategy towards revitalising Indian agriculture.

Farming in India faces multiple problems: farms are increasingly being fragmented, climate crisis is making production and hence incomes more and more volatile, the younger generation is reluctant to adopt farming not just because of the economic vulnerabilities but also the social stigma attached to it. It is utopian to believe that the Indian State will ever have the fiscal might to offer the kind of income support which advanced countries provide to their farmers.

The most effective way to boost the economic prospects of farmers in India is to ensure that they get a larger part of the surplus that agricultural products generate in the retail market. The clichéd comparisons of a farmer selling a crop for a few rupees and shopping malls in urban centres selling them with a huge mark-up are not entirely pointless. In fact, one only has to look at the success of the dairy cooperative movement in India to see the difference where they have so far successfully preserved an overwhelming market share from not just domestic but also multinational companies. Without undermining the problems India’s dairy cooperatives are facing, one can say with high confidence that not having them at all would make dairy farmers worse off than they are.

Giving a big push to cooperatives in the farming sector, notwithstanding its political motives, holds the promise of cooperatives achieving such vertical integration and garnering a large part of the surplus for farmers. Of course, it remains to be seen whether the BJP and the government wants to push things in this direction.

To be sure, cooperatives are only as good or bad as the larger socio-political ecosystem around them. Whether they become genuine engines of creating egalitarian but efficient agricultural business or just create a parallel (and equally degenerate as others) power centre to expand the BJP’s political outreach will depend on how the opposition, and more importantly, farmers themselves take to this initiative. We had argued in an earlier piece in these pages that caste-based divisions are the biggest impediment to development of a genuine farmers’ solidarity in India. A cooperative that is working to prioritise caste and kinship ties is doomed to fail in achieving its larger objectives.

Whatever the eventual outcome is, one has to acknowledge the fact that the BJP has decided to throw a challenge at existing political opposition in India’s agrarian economy by pushing the agenda of cooperatives. Whether the opposition sees this is an attempt to purge its last remaining institutional sanctuaries or an opportunity to push for genuinely radical farmers’ solidarity is something that only time will tell. The BJP of course is banking on a response of the first kind.

Every Friday, HT’s data and political economy editor, Roshan Kishore, combines his commitment to data and passion for qualitative analysis in a column for HT Premium, Terms of Trade. With a focus on one big number and one big issue, he will go behind the headlines to ask a question and address political economy issues and social puzzles facing contemporary India.

The views expressed are personal