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narendra modi | Swaminathan aiyar: agriculture bill rolls back a setback for the economy along with prime minister Modi: Swaminathan Aiyar

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By surrendering to farmers, Mr. Modi opened the door to similar unrest, similar protests and similar sabotage and humiliation on all kinds of other reform fronts, says Swaminathan Aiyar, consulting editor, And now.

Can the repeal of agricultural bills have a cascading impact on the whole economy?
Yes. Many people say that the reforms could have been acceptable, but they were rushed. There was not enough time for debate and discussion. I think this is all a completely false argument. The Supreme Court stepped in and said I was staying away. We will have an expert committee. You could have all the discussions. You could have whatever debate you want with them. The farmers’ organizations have been very clear, we are not even going to talk. It was a straightforward tactic from Jat – carry some weight, we’ll use it.

They know that all over the world, in democracies all over the world, agricultural lobbies have done similar things, crippled roads, crippled administration and governments have gone to various countries and it can be done here too. So no matter how many discussions you had, it was going to happen. They are not interested in things like discussions and debates. They are now saying okay, even if Mr. Modi withdraws the three laws, we will continue the agitation until there is a law enshrining it.

So there will be no end to this particular tyrant. It is now shown that if Mr. Modi is qualified as a strong man, he can be brought into line by a sufficiently important demonstration; a few thousand people can demand a ransom from this particular government. If this is the lesson you will get, it will be followed by all the other groups as well.

For example, right now the government has a privatization program. But privatization has always met with opposition from opposition parties and trade unions. Unions can accommodate as many as thousands of people as these farmers did. In UP, in Uttar Pradesh, there was a proposal to privatize the distribution of electricity. The losses of the national electricity boards amounted to hundreds of thousands of crores. The only way to reform the system is to privatize. But when it was attempted, the employees of the National Electricity Board immediately declared that they would go on an indefinite strike and cripple the state. There will be no electricity. The state government said to have a negotiation on this. No one believes it will work.

But the point is that the BJP saw that not only in the case of the farm, but also in the case of the electricity UP, if a sufficiently large number of determined people say that we are going to strike unless you cancel your privatization, it happen.

According to Mr. Modis’ formal position, we will now proceed with the privatization. Apart from a shortlist of essential companies, all the others will be privatized. Excuse me, but if there is the kind of fuss that UP’s farmers and electricity people have been doing, how will it work? There is a national monetization pipeline to increase Rs 6 lakh crore by selling old assets like ports and using that money to make infrastructure. Great idea and it is supposed to be the backbone for the financing of a lot of new highways, pipelines, road networks, power grids all the Indian network.

Where will that money come from if you can’t privatize and if you can’t monetize the other old assets when people throw that up? The point is, Mr. Modi is now considered weak. Mr. Modi is now seen as someone whose measures can be overturned. Within the BJP, organizations like Bharatiya Mazdoor Sangh and Swadeshi Jagaran Manch have always been anti-reform. They were sidelined after the 2019 election. Mr. Modi came back in such a smashing style he could say listen, I’m sorry, now you’ll have to get in the back. I have to move forward in these areas. These two organizations will once again be enthusiastic to say no, we will again actively oppose all these reform measures within the BJP.

So, by surrendering to farmers, Mr. Modi opened the door to similar unrest, similar protests, and similar sabotage and humiliation on all kinds of other reform fronts.

From a market message perspective as well, do you think the decision is significantly negative for India? As you said every reform comes up against small agitations but this gives to the markets and especially to the FII fraternity, the signal that if the protests were to continue longer, they could be repealed by the government? Do you think the message for the markets is not going to get through well?
Absoutely. Mr. Modi does not adapt this decision to the market. Mr. Modi has adapted this decision to the upcoming elections in Uttar Pradesh, Punjab and three other states. This is important because the Punjab and the UP have produced the bulk of the farmers participating in this turmoil, the people who have benefited the most from minimum support prices and want the existing system to continue. There are farmers elsewhere, the Shetkari Sanghatana of Maharashtra has been very supportive of the reforms and against these farmers of the Punjab.

Likewise, the Federation of Agricultural Associations of Andhra Pradesh, P Chengal Reddy, also said that we want the reforms. So it’s not that all farmers want the reforms. These are the farmers of these states and Mr Modi says that instead of taking the risk of losing in this election long before the election, let me dismiss this protest because if my image will be tarnished, while the market stock market will be affected, while other problems will arise on the privatization front, it is currently in balance. He thinks it is wiser to withdraw to that front at this point than to risk a very humiliating defeat in the UP or in the Punjab elections.

But the consequence is very clear, all kinds of other people who oppose the reforms will be greatly encouraged and will do their best to sabotage the reforms. Not only in the various unions outside, but even the unions and Swadeshi Jagaran Manch within the BJP will oppose it. Keep in mind that these people also opposed the land acquisition law in 2014 that Mr Modi introduced and were forced to go back.

He has done it now. The point is, Mr. Modi wasn’t particularly looking to signal the stock market. He is looking to win the UP election. Is it possible for everything to turn off? It’s possible. But all the opposition parties will fund to try to continue the peasant agitations. Right now they’re trying to keep saying you must have low MSP. The point is that even if Mr. Modi gives in and enacts a law on the MSP, they will find another reason to continue to agitate until the elections.

Politics is a very important part of it. It is not just the farmers and some reformers. This is very clearly above the UP and Punjab elections and it has to be seen in that context and it is troubling for anyone looking at the stock market to say if this kind of constant sacrifice to populist unrest is taking place what is the future of reforms and what are the implications for India’s economic growth. I’m afraid the message is negative. This means that growth and productivity will suffer, so it’s a setback for the economy as well as for Mr. Modi.

Sources

1/ https://Google.com/

2/ https://economictimes.indiatimes.com/markets/expert-view/farm-law-bill-rollback-a-setback-to-economy-as-well-as-pm-modi-swaminathan-aiyar/articleshow/87842124.cms

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