The Peasant question in India

Part-1: Reform and Reformism: Neoliberal phase

Arup Kumar Baisya

The peasant question is always an important aspect for radical societal change. The role of the peasant community is dependent on the rural agrarian social relations. Engel succinctly described this role of peasantry in the following passage of his writings on the “Peasant Question in France and Germany”.  

The hazy socialistic aspirations of the Revolution of February 1848 were rapidly disposed of by the reactionary ballots of the French peasantry; the peasant, who wanted peace of mind, dug up from his treasured memories the legend of Napoleon, the emperor of the peasants, and created the second Empire. We all know what this one feat of the peasants cost the people of France; it is still suffering from its aftermath.

But much has changed since then. The development of the capitalist form of production has cut the life-strings of small production in agriculture; small production is irretrievably going to rack and ruin. Competitors in North and South America and in India, too, have swamped the European market with their cheap grain, so cheap that no domestic producer can compete with it. The big landowners and small peasants alike see ruin staring them in face. And since they are both owners of land and country folk, the big landowners assume the role of champions of the interests of the small peasants, and the small peasants by and large accept them as such.

In a different context of the ongoing peasant struggle in India, Engel’s conclusive remark on convergence of interest of big and small landowner in late nineteenth century France and Germany appears to be prophetic. Apart from the impact of the historical development of the Indian agricultural, the neoliberal policy persuasions in the past few decades primarily lead Indian state of affairs to the present imbroglio emanated from the peasant uprisings.

A section of experts and agricultural economists identified the increase of current account expenditure through food and fertilizer subsidies as the root cause behind the decline of capital account expenditure as public investment for capital formation in agriculture during the 1980s. Their argument was built on a premise of political economy that the politically conscious, interest-seeking farmers’ groups emerged from the backdrop of Green Revolution in the 1970s acted as a powerful pressure-group to neutralize the state’s authority to decide the agricultural policy. The consideration of the peasant as a single category without focusing on the dynamics of the internal differentiation within the peasant community leads to such one-sided stereotypical academic exercise.

The issue of tradeoffs between public investment and input subsidies was empirically examined by Chand and Kumar who found that the increase in subsidies and decline in revenue contribution of the agricultural sector have caused adverse impact on public sector capital formation. The paper estimated that one rupee going into public investment is ten times more productive over its lifetime as compared to the contribution of subsidies to output growth. Thus there exists a very strong case for reducing agricultural subsidies and increasing public investment in agriculture. (Agrarian Crisis in India: D. Narashima Reddy: OUP: 2009).

But data show that in the decade of the 1990s, even the increase in subsidies in real terms fell short of the decrease in public expenditure, and the ratio of subsidies plus investment to agricultural GDP fell from 7.92 per cent during 1986-90 to 7.42 for the decade of 1990s as a whole. The total support to agriculture through investment and subsidies during 1991-2000 even declined as compared to 1981-90. So the above argument of declining public investment in agriculture caused by the increase in subsidies is not tenable. The real issue lies elsewhere and it must be ascertained within the overall economy and the paradigmatic shift in the economic policy.

The neoliberal phase of global capitalism post-1980s was marked by the shift of focus to finance and service sector and the restructuring of capital based on labour-arbitrage for profit and capital accumulation. This shift exacerbated the tendency of primitive accumulation in rural areas through displacement and thus ignored the agricultural economy. The penetration of finance or debt capital in agriculture set an opposing trend of acceleration and retardation of the capital formation in the mutually intertwined agricultural and industrial rural production process which has been developing through long drawn out dirigiste development model and green revolution.   The reform measures which have been undertaken to pursue the neoliberal policy framework has an adverse impact on independent bourgeois development.

Lenin while studying the development of capitalism in agriculture in Russia underscored the fact that the diffentiation of the peasantry cannot be made only on the basis of property inequalities, but the process is not at all confined to property “differentiation". The peasantry is dissolved into rural bourgeoisie (chiefly petty bourgeoisie) and the rural proletariat – a class of commodity producers in agriculture and a class of agricultural workers. The peasantry who rent land is mainly peasant bourgeoisie and the peasantry who lease out land is the peasant proletariat. All data reveals that this form of new development is almost ubiquitous in the entire landscape of Indian agriculture, albeit with a quantitative variations in consonance with the law of uneven development of capitalism.

The roots of the present all-pervading crisis in Indian agriculture could be traced back to the complacency and gross neglect of agriculture since the mid-1980s. Having achieved the sustainable self-sufficiency in food production and even to export demand, the Governmental and institutional interventions are considered to be abandoned as anachronistic and backward-looking to open up the domestic market for both domestic and foreign big players. The monopolistic control of both input and output market has been accentuated by the reform process that has been envisaged and initiated. The imperialist policy for capital drain from the country like India to the US market has been designed in such way that the consumption demand of food-grains is reduced through income-deflation to ensure cheap exports of food-grains to developed countries. Instead of extending the achievement of capitalist development in agriculture for building a strong foundation for self-reliant domestic economy, the Indian policy-makers toed the neoliberal footsteps and followed the dictates of IMF and World Bank to undertake wide-ranging reforms measures. The process of building the foundation of self-reliant domestic economy could have been pursued by completing the unfinished land reform, increasing public expenditure, promoting rural industrialization while emphasizing the domestic food-security issue in agricultural production.

Instead of this policy drive, international trade in agriculture is liberalized. All Indian product lines are placed under Generalised System of Preferences (GSP). By 2000 all agricultural products are removed from Quantitative Restrictions (QRs) and brought under tariff system. Canalization of trade in agricultural commodities through state trading agencies was almost removed, and most of the products were brought under Open General Licensing (OGL). The average tariffs on agricultural products, which stood at over 100 per cent in 1990, were brought down to 30 per cent by 1997 and were targeted to come down further. Though opening up of trade in seeds and the seed industry to private trade and foreign investment started in a limited way under the Seed Development Policy 1988 by 1991, 100 percent foreign equity was allowed in the seed industry in India and restrictions on import of seeds were relaxed. Fertilizer subsidy, which amounted to 3.2% of GDP and 6% of Union revenue expenditure in 1990-91, was reduced to 0.69% of GDP by 2003-04. Privatization of power sector at the behest of World Bank increased the power tariff in the agricultural sectors. For agricultural marketing, changes in the provisions of Essential Commodities Act, Encouragement of contract farming and agricultural commodity forward market has been initiated in the 1990s.

The present farm law is the culmination of the neoliberal process that has been initiated post-1980s, but with a sudden abrupt jump in restructuring the agriculture for the benefit of corporate profiteering and plunder. This hurriedly formulated qualitative change is envisaged by the policy-makers of present ruling dispensation to take the opportunity of the global politico-economic scenario emerged from Covid crisis. These sudden shocks on the farming community created a situation where Engel’s words reverberate. He said, “The big landowners and small peasants alike see ruin staring them in face. And since they are both owners of land and country folk, the big landowners assume the role of champions of the interests of the small peasants, and the small peasants by and large accept them as such.”      

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Feb 20, 2021