A Budget amid Agrarian Crisis Pt. VI

Ruinous Drive to Throw Agriculture to ‘Market Forces’

A central tenet of neoliberalism is that ‘free’ markets, unencumbered by organised social intervention (whether by the State, trade unions, or other popular organisations), efficiently allocate resources. Accordingly, the neoliberal prescription for resolution of virtually all economic problems is further free-market ‘reform’, requiring the withdrawal of the State from public investment and regulation of the economy.[1] This prescription is ruinous for all sectors of the economy, and so too for agriculture.

In the following, we briefly sketch the following: why public sector investment and intervention in agriculture has taken place in the past in India; the present neoliberal drive to further withdraw the remnants of such investment and intervention; the ruinous effects already experienced over the entire liberalisation period; the significance of public sector investment even for private investment by the peasantry; and the particular importance of public sector investment and institutions in the face of impending climate change.

Market forces are hardly alien to India’s agriculture. Millions of small producers sell a part or the whole of their output to private traders, who then sell most of it to petty retailers, who in turn sell it to consumers. Hardly a day passes without the newspapers informing us of either a crash in the prices peasants receive for one crop or the other, or a steep rise in the prices consumers pay for vegetables or pulses. Moreover, domestic market forces are integrated with global ones: With the opening up of India’s agricultural markets post-WTO, agricultural prices on the world market directly influence the prices received by Indian producers.

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Rajan Exits, Only to Remain

For the last two weeks, the media have been obsessed with two pieces of news: the exit of the Reserve Bank governor, Raghuram Rajan (‘Rexit’), and the exit of Britain from the European Union (‘Brexit’). Today, the media present any such event from the angle of how it will affect speculative flows of foreign capital in and out of India. Indeed, the extent of attention given to these two events, Rexit and Brexit, seemingly far removed from the lives and livelihoods of most Indians, is itself testimony to the integration of the Indian economy with global financial flows.

In what is now a set pattern, Narendra Modi delayed discussing the actions of his partymen (here, Subramanian Swamy) until they achieved their aims (here, the removal of Rajan). Only after this did Modi break his silence, as usual uttering some stern platitudes and distancing himself from the actions of unnamed persons. It is possible that the Prime Minister and the BJP leadership now wish to rein in Swamy’s antics; but it no secret that Modi had problems with the RBI governor. Under the preceding government, Rajan had headed an official committee which ranked Gujarat as a “less developed state”, much to the annoyance of then chief minister Modi. After Modi came to power at the Centre, Rajan made a number of remarks which indirectly disparaged or undermined the BJP government: for example, on the Prime Minister’s ‘Make in India’ slogan, or on the Finance Minister’s claim that India had the fastest rate of growth. Perhaps Rajan believed his status as darling of foreign investors protected him from removal.

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