Narendra Modi, Indian Prime Minister, addresses Patna, India, on 28 October.
Photo:
Aftab Alam Siddiqui / Associated Press
For weeks, India has been consumed by protests against agricultural reform. This is perhaps the toughest political challenge of Indian Prime Minister Narendra Modi, but millions of lives could be improved if he keeps the line.
In September, Mr. Modi’s government passed three bills to reform the country’s state system for agriculture. The legislation highlights the monopoly of government-controlled gardens, where farmers sell crops through intermediaries rather than directly to private buyers. It also removes rules that limit grain storage that have hampered investment in agriculture.
However, the reform would always provoke an opposite reaction, given the number of farmers surviving under the old system. More than half of India’s workforce lives on agriculture, compared to about a quarter of Chinese and less than 2% of Americans. Millions of people will inevitably have to leave farms as India develops, but left-wing rhetoric about powerful and evil corporations still has some appeal.
The government’s strong response to the protests has not eased tension, although it is doing a better job lately. Legislation moved quickly and with few consultations, but these changes have been debated in India for decades. The major economic reforms of 1991 also passed relatively quickly and led to sustained growth and improved livelihoods.
The changes will attract much-needed investment and make India a more competitive food exporter, but more needs to be done. Subsidies to fertilizers and electricity harm the environment and push farmers to produce inefficient crops. The minimum government support price will continue along with government purchases. Eventually, these statist relics will have to go too.
There are some legitimate concerns about implementation, given Mr Modi’s past struggles. In 2016, the abrupt and poorly executed demonetization plan undermined public confidence in the government. So did the sloppy deployment of a tax on goods and services the following year. A smooth transition from government market gardens would make further reforms welcome in the future.
Despite employing about 263 million workers, agriculture accounts for about 17% of the country’s total income. Privatization will lead to efficiency and consolidation, which means millions of Indians will have to find work elsewhere.
Clearly the government had this in mind when it passed a series of parallel labor reforms. The new laws limit union power and facilitate women’s night work. More companies will have the flexibility to lay off workers when needed. These changes should invest in manpower-intensive manufactures, which for many will provide a better life than staying on the farm.
Mr Modi disappointed hopes of economic liberalization in his first term, but the Covid-19 recession appears to have brought about a resurgence. He deserves merit for moving in the right direction.
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