The stalemate between the government and the farmers’ unions is unchanged despite 11 rounds of talks. The farmers view the new farm laws as a ploy to dispossess them of their landholdings and give a free hand to tycoons to grab farmers’ holdings, though small. Protesters allege the new laws were framed in secret understanding with tycoons.
The farmers have a reason to abhor the rich businesses. According to a January 2020 article by Oxfam, India’s richest 1 per cent hold over four times the wealth of 953 million people who make up the poorest 70 per cent of the country’s population. India’s top nine billionaires’ income is equivalent to the wealth of the bottom 50 per cent of the population. The opposition has accused the government of “crony capitalism.
The government has tried every tactic in its tool- kit to becloud the movement (sponsored by separatist Sikhs, desecrated Republic Day by hoisting religious flags at the Red ford, and so on).
The government even shrugged off the protest by calling it minuscule and unrepresentative of 16.6 million farmers and 131,000 traders registered until May 2020. The government claims that it has planned to build 22,000 additional mandis (markets) 2021-22 in addition to already-available over 1,000 mandis.
What is crony capitalism?
“Crony capitalism” is well defined in the English Oxford Living Dictionaries, Cambridge and Merriam –Webster. Merriam-Webster defines “crony capitalism” as “an economic system in which individuals and businesses with political connections and influence are favoured (as through tax breaks, grants, and other forms of government assistance) in ways seen as suppressing open competition in a free market if there’s one”.
Cambridge dictionary defines the term as “ an economic system in which family members and friends of government officials and business leaders are given unfair advantages in the form of jobs, loans, etc.: government-owned firms engaged in crony capitalism”.
A common point in all the definitions is undue favours (sweetheart contracts, licences, etc) to select businesses. It is worse than nepotism as nepotism has a limited scope and life cycle, but, “crony capitalism” becomes institutionalized.
India’s crony capitalism
Unruffled by the government’s arguments, the opposition continues to accuse the government of being “suit-boot ki sarkar” and an ardent supporter of “crony capitalism” referred to as Ambani and Adani. Modi did many favours to the duo. For instance, they were facilitated to join hands with foreign companies to set up defence-equipment projects in India.
BJP-ruled state governments facilitated the operation of mines in collaboration with the Ambani Group just years after the Supreme Court had cancelled the allotment of 214 coal blocks for captive mining. Modi also used Adani’s aircraft in March, April and May 2014 for election campaigning across the country.
Modi earned the title “suit-boot ki sarkar” when a non-resident Indian, Rameshkumar Bhikabhai Virani gifted him a Rs. 10 lac suit. To save his face, Modi later auctioned the suit on February 20, 2015. The suit fetched a price of Rs, 4.31 crore, nearly four hundred times the original price. Modi donated the proceeds of the auction to a fund meant for cleaning the River Ganges. It was subsequently alleged that the Surat-based trader Laljibhai Patel who bought the suit had been favoured by being allotted government land for building a private sports club.
Miffed by opposition’s vitriolic opposition, Ambani’s $174 billion conglomerate Reliance Industries Ltd. categorically denied collusion with Modi’s government earlier this month. Reliance clarified that it had never done any contract farming or acquired farmland, and harboured no plans to do so in future.
It also vowed to ensure its suppliers will pay government-mandated minimum prices to farmers. The Adani Group also had clarified last month that it did not buy food grains from farmers or influence their prices.
Like Modi, both Adani and Ambani hail from the western Indian state of Gujarat, just, who served as the state’s chief for over a decade. Both the tycoons are reputed to be Modi’s henchmen.
Their industry quickly aligns its business strategies to Modi’s nation-building initiatives. For instance, Adani created a rival regional industry lobby and helped kick off a biannual global investment summit in Gujarat in 2003 that boosted Modi’s pro-business credentials.
In 2020, Ambani raised a record US $27 billion in equity investments for his technology and retail businesses from investors including Google and Facebook Inc. He wants to convert these units into a powerful local e-commerce rival to Amazon.com Inc. and Wal-Mart Inc.
The Adani group, which humbly started off as a commodities trader in 1988, has grown rapidly to become India’s top private-sector port operator and power generator.
Ambani and Adani are like America’s Rockefellers and Vanderbilt’s in the USA’s Gilded Age in the second half of the 19th century.
Modi government’s tutelage of Ambanis and Adanis is an open secret. Kerala challenged Adani’s bid for an airport lease as a state minister said last year, Adani winning the bid was “an act of brazen cronyism.”
The threat of monopsonistic exploitation; is farmer’s fear genuine?
Farmers who could earlier sell grains and other products only at neighbouring government-regulated wholesale markets can now sell them across the country, including the big food processing companies and retailers such as Walmart.
The farmers fear the government will eventually abolish the wholesale markets, where growers were assured of a minimum support price for staples like wheat and rice, leaving small farmers at the mercy of corporate agri-businesses.
The farmers have a logical point. Agriculture yields less profit than industry. As such, even the USA heavily subsidizes its agriculture. US farmers got more than $22 billion in government payments in 2019, the highest level of farm subsidies in the last 14 years, and the corporate sector paid for it.
The Indian government is reluctant to give a permanent legal guarantee for the MSP. In contrast, the US and Western Europe buy directly from the farmers and build their butter and cheese mountains.
Even the prices of farm products at the retail and wholesale levels are controlled by the capitalist government. In short, not the principles of capitalization but well-worked-out welfare measures are adopted to sustain the farm sector in the advanced West.
The farmers would suffer double exploitation under a monopsony (more sellers fewer buyers) at the hands of corporate sharks as they would pay less than the minimum support price to the producers. Likewise, consumers will have to pay more because the public distribution system is likely to be undermined as mandi (regulated wholesale market) procurement is would eventually cease to exist.
The plight of the Indian farmer
The heavily indebted Indian farmer has an average income of only about Rs. 20000 a year (about Rs. 1666 a month). Thousands of farmers commit suicide by eating pesticides to get rid of their financial difficulties.
A study by India’s National Bank for Agriculture and Rural Development found that more than half of farmers in India are in debt. More than 20,000 people involved in the farming sector died by suicide from 2018-2019, with several studies suggesting that being in debt was a key factor.
More than 86 per cent of India’s cultivated farmland is owned by small farmers who own less than two hectares of land each (about two sports fields). These farmers lack the acumen to bargain with bigger companies. Farmers fear the Market Support Price will disappear as corporations start buying their produce.
Modi sarkar is unwilling to yield to the farmers’ demand for fear of losing his strongman image and Domino Effect’. If he yields on the matter of the farm laws, he may have to give in on the Citizenship Amendment Act also.
Since fund collection in some foreign countries has started to sustain the movement, the movement may not end anytime soon. Unless Modi yields early, he would suffer voter backlash in coming elections. The farm sector contributes only about 15 per cent of India’s $2.9 trillion economies but employs around half its 1.3 billion people.
Mr Amjed Jaaved has been writing freelance for over five decades. He has served the federal and provincial governments of Pakistan for 39 years. His contributions stand published in the leading dailies and magazines at home and abroad (Nepal. Bangladesh, et. al.). He is the author of eight e-books including The Myth of Accession. The views expressed in this article are the author’s own and do not necessarily reflect Global Village Space’s editorial policy.