Tens of thousands of farmers from northern India have swarmed New Delhi, blocking roads and highways in protest against the three agricultural bills passed by parliament. With more than half of the Indian population's livelihood depending on agriculture, the demonstrations are threatening Modi's Administration.
The Indian government recently passed the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill and the Essential Commodities (Amendment) Bill. From the government's official explanation, these new laws are intended to benefit farmers by reducing the number of middlemen cartels and creating a more free market for farmers to sell products.
Nevertheless, most farmers disagree with the government's arguments. They believe the new bills will expose them to exploitation by big companies. They claim it will damage mandis ( or rural markets) and lead to an erosion of the Minimum Support Price (MSP) system. In India, the MSP provides farmers with minimum price support and guarantees for the prices of 23 crops under the supervision of the Agricultural Produce Market Committee (APMC). The first sale of produce can only occur in its mandi. Though the reforms seem to aim at breaking the monopoly, farmers have adapted to earn profits from the minimum support price and do not want to give up their vested interests. If the government legislates a guarantee of procurement at MSP, farmers might accept the new laws.
During the protest, negotiations between the government and the farmers' representatives have failed several times. The conflict itself may have arisen from India's social situation, and other factors might fuel the protest. Comprising 78% of the rural population, small-time farmers are vital to Indian agriculture, but highly vulnerable to crises because of their limited access to resources, credit and basic healthcare facilities. Thus, they rely on minimum price support and government subsidies. Modi's government wishes to promote agricultural modernization and hopes to reform the agricultural system, which seems like a progressive initiative at first but ignores Indian agrarian society's population characteristics. As for the middlemen who originally occupied a position of monopoly in agricultural product sales, the new regulations strike at the root of their interests, forcing them to compete with domestic and foreign enterprises. Therefore, they might emphasize the potential loss of benefits to farmers caused by the acts and encourage farmers to protest.
The Modi's government's attempts to reform agriculture may also stem from India's financial pressures under the Covid-19 crisis. Under the impact of the epidemic, according to the Statistics Ministry, India's GDP shrank 23.9% in the three months to June from a year earlier, which was the sharpest decline since 1996, and the public debt is around 90% of GDP in 2020. To deal with the debt risks, governments need to reduce spending. Therefore, free-market reforms of agriculture is a good choice to achieve both subsidies cutting and the pressure easing on government debt.
Economic pressures and consideration of the agricultural development may lead the government to set the new laws. However, different parties and Indian society's interests conflict with them and have ultimately driven the manifestations. Under the threat of the Covid-19 pandemic, India's development is still facing many challenges.