The political economy driving farm protests
Fearing that India’s controversial proposed farm laws will disproportionately benefit a few corporate magnates, farmers have made Mukesh Ambani’s Reliance storefronts and Reliance Jio infrastructure the sites of major protest over the past few months. While Ambani has insisted that his company has no plans to enter corporate farming, his purported political networks and accrual of wealth in the Narendra Modi-era have created a trust deficit between farmers and corporates.
A section of analysts have focused on framing the recent farmer protests solely upon the complexities of farm subsidies and crop diversification and production, the sort of debates that have animated rural-urban conflict over the past few centuries across the world. But what is missed in this simplistic class framing of the recent farmer conflict is the question of whether there is genuine credibility in restructuring markets given India’s political economy.
Moving beyond the narrative of agricultural reform, I wish to describe how the current political moment is informed by apprehensions about economic centralisation and political financing in India and how it transforms the political responsiveness of government.
India is the most centralised large economy in the world. According to the World Inequality Database, the top 1% of the richest Indians controlled 21.4% of the country’s income in 2019, slightly more than Russia (21.3%), the poster boy for economic centralisation, and other major economies such as the United States (18.7%) and China (13.9%). To be clear, this is not only a product of the Modi era, but a steady accumulation of income among India’s richest over the 2000s.
Far more noticeable has been the concentration of wealth by a few corporate actors. A recent analysis by Saurabh Mukherjee and Harsh Shah at Marcellus Investments shows that the top 20 companies in India are responsible for 70% of India’s profits (up from 14% in the early 1990s). While foreign direct investment (FDI) in India showed growth during the coronavirus pandemic, on the back of the Facebook investment in Jio, more that 40% of FDI inflows were captured by Ambani’s Reliance Group.There are examples of explicit sales of State assets such as six airports, some profitable, controlled by the Airports Authority of India (AAI), eventually won by a group headed by Gautam Adani in 2019. The question is not about the legality of these sales, but its impact on the concentration of wealth.
As Harish Damodaran recently argued, the concentration of wealth in a few corporate actors has upended the traditional model of funding for political parties. The ruling Bharatiya Janata Party (BJP) requires extraordinary financial resources to maintain its dominance electorally (at a national level) and the strength of its party machine. No party in India can be successful unless it procures a stable source of funding; this is all the more pressing for a party such as the BJP, which requires significantly more resources. Until recently, a key source of funding came from “regional capitalists” — landed elite, liquor or sugar barons, builders. This diverse pool of regional capitalists provided for a reservoir of funding for myriad political parties, especially regional ones.
The recent (and growing) concentration of wealth has weakened the political financing environment for opposition to the BJP in two important ways.
First, many corporate actors disproportionately gaining wealth today operate at an all-India level — so it is particularly important to curry favour with the national government. This generates incentives to fund the party in power at the Centre, which has become all the more possible due to India’s controversial electoral bond scheme.
Second, given India’s sluggish economic performance, particularly after demonetisation, extracting money from local contracts is less lucrative than before — which, in all likelihood, impacts parties in power at the state level, often other than the BJP, to a greater degree.
I view the scale of the farmer protest as fundamentally questioning whether disagreements with the current government can be plausibly framed through democratic procedure. Political financing is important for competing in elections, from paying party workers to mobilising voters through advertising and holding rallies. As political theorist Robert Dahl reminds us, it is not enough to have elections. The political opposition must be able to compete on an equal footing with the party in power in a fully functioning democratic system. To put this another way, with the current concentration in wealth, should we believe the farmers can genuinely field political opposition in the democratic space?
This is why we need to see the protests as more than anger over a feared removal of the minimum support prices. Rather, this is an expression of the fact that the farmers understand that they have little opportunity to raise grievances through bargaining within the parliamentary or electoral system. By ramming the controversial farm laws through Parliament without discussion, the ruling BJP fed into this perception. By setting up a committee to look at the issue, only to stack it with largely pro-government voices, the Supreme Court too fed into this perception. This is dangerous terrain. When elections do not provide a genuine platform for democratic bargaining, people find other ways, including street protests, to raise their grievances.
Neelanjan Sircar is an assistant professor at Ashoka University and senior visiting fellow at the Centre for Policy ResearchThe views expressed are personal