Why Modi must defy farmers' fury over US trade deal to push agri reforms

PM Modi should recognise that this moment is a chance to finish what he started. Instead of retreating, he should build on this momentum to implement comprehensive agricultural reform

By Mihir S Sharma

 

Over the past weeks, farmers in India have gathered to protest what they call Prime Minister Narendra Modi’s “surrender” to President Donald Trump over trade. They burned symbolic copies of the deal; they had to, since they didn’t have any actual text.

 

The US-India framework agreement, like most of the slapdash settlements that Washington has arrived at over the past year, is still a work in progress. We don’t know for certain what bits of Indian agriculture will be affected — and neither do the protestors. They might not be affected at all. But that won’t stop them protesting, nor Modi from worrying.

 

India’s agricultural communities are influential enough to intimidate even its prime minister, who cherishes his strongman image and rarely admits the existence of opposition. He has twice before retreated in the face of their anger. Once early on in his tenure, when he withdrew a law meant to make it easier to acquire agricultural land; and again in 2021, when he was forced into a humiliating climbdown on market-friendly reforms when a legion of farmers in tractors besieged Delhi for months. 

 

This time, like in 2021, the timing isn’t great for Modi. Two opposition-ruled states into which his Bharatiya Janata Party would dearly like to make inroads go the polls in a few months; and next year the states of Punjab and Uttar Pradesh, where farmers are a major constituency, will hold elections. UP, in particular, is the heart of the BJP’s power and he has to demonstrate that his control of its politics has not slipped in the slightest.

 

Opposition parties, which are normally scrambling around for issues to beat the ever-more-popular prime minister with, have already sensed an opening. They have begun to hammer away at his “betrayal” of India’s interests.

 

The unsettled nature of the deal means that they can demand answers that New Delhi simply can’t give, because the issues in question may not yet be settled. Erratic behavior from the US administration, which added and then removed a reference to “pulses” — a staple food in India that includes lentils and chickpeas — from its official fact-sheet on the deal, has given Modi’s rivals enough ammunition. 

 

As details are ironed out over the next months in the best-case scenario anger, questions and protests will only gain momentum. Modi will be sorely tempted into a third denial of any attempt to intervene in Indian agriculture. But, this time, he should keep the faith. In fact, he should double down.

 

For one thing, it is unlikely that the richest and most powerful farmers who forced previous U-turns will be affected by this deal. They mainly have interests in wheat, rice and dairy, and we’ve been told those sectors aren’t part of the agreement.

 

These landowners, who are concentrated in the states around the capital and thus are able to blockade it to pressure the national government, are the ones that Modi should be most worried about. 

 

The other reason he should stand firm is that it’s the right thing to do. Hostility to both the US deal and the much broader free trade agreement with the European Union, which was also signed last month, has been much less than most anticipated. The lesson to take from this is that the objectors are not as numerous as the prime minister fears.

 

Modi should recognise that this moment is a chance to finish what he started. Instead of retreating, he should build on this momentum to implement comprehensive agricultural reform. The farm laws he abandoned in 2021 can be redrafted, improved, and reintroduced. They would have freed smallholders to sell their produce outside government-controlled markets, allowing them to get better prices, connect them to broader supply networks, and move up the value chain. He can also begin to reform agricultural subsidies to really focus on the farmers that need help, instead of those who don’t.

 

As Premier Zhu Rongji figured out more than two decades ago as China prepared to join the World Trade Organization, international agreements are always an opportunity to push through painful domestic reform. Once a country accepts the benefits of economic integration — as Modi’s voters apparently now have — trade deals provide leverage for broader transformation. 

 

Indian farmers’ fears are as imaginary as the documents they’re burning on the streets. Their prime minister shouldn’t let phantom anxieties hold him back. Instead, they should push him forward.  (Disclaimer: This is a Bloomberg Opinion piece, and these are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper)