Why agrarian distress has been less of a poll issue this time

This is unlike in 2019, where the ruling Bharatiya Janata Party had, even prior to the Lok Sabha elections, suffered state assembly poll reverses in Gujarat (December 2017) and defeats in Madhya Pradesh, Chhattisgarh and Rajasthan (November-December 2018).

Those losses were ascribed to farmer unrest arising from low crop prices, particularly in the aftermath of the Modi government’s November 8, 2016 move to scrap all existing high-denomination currency notes.

Demonetisation, together with the crash in global agri-commodity prices after 2014, turned the political spotlight on krishi sankat. It prompted a response from the Modi government — whether through MSP hikes (which were quite modest in its initial two years) or the Rs 6,000 annual cash transfer to all land-holding farmer families under the Pradhan Mantri Kisan Samman Nidhi scheme (made operational from December 2018, just four months before the last Lok Sabha elections).

Less of a crisis

The accompanying table shows the Indian agriculture sector’s average annual growth during the Modi 2.0 period from 2019-20 to 2023-24 at 4.2%. That was a full percentage point higher than the average for the preceding five-year Modi 1.0 period. The growth rate difference is even more (4.1% versus 0.3%) if one considers only the crops sub-sector.

Table.

The somewhat better production performance has had to do with rainfall failure being recorded in only one out of the five Modi 2.0 years (2023-24), as against three (2014-15, 2015-16 and 2018-19) during Modi 1.0. All four were also El Niño years.

El Niño refers to an abnormal warming of the central and eastern equatorial Pacific Ocean waters off the coasts of Ecuador and Peru, leading to increased evaporation and concentrated cloud-formation activity around that region. It then brings more rain along western Latin America, the Caribbean and US Gulf Coast, while correspondingly depriving India, Southeast Asia and Australia of convective currents and precipitation.

According to the National Statistical Office, the farm sector grew by a mere 1.4% in 2023-24 and, likewise, by minus 0.2% in 2014-15, 0.6% in 2015-16 and 2.1% in 2018-19.

But it isn’t production alone. Farm produce realisations, too, have been better during Modi 2.0 than in Modi 1.0.

The United Nations’ Food and Agriculture Organization’s widely-tracked food price index averaged 122.5 points in 2012-13 and 119.1 points in 2013-14. During Modi 1.0, the index — a weighted average of the world prices of a basket of food commodities over a base period value (taken at 100 for 2014-16) — plummeted to 90 by 2015-16. It recovered during Modi 2.0 to touch 133.2 points and 140.8 points in 2021-22 and 2022-23 respectively (see chart).

Chart.

High international prices enabled India’s agriculture exports to scale all-time-highs of $50.2 billion in 2021-22 and $53.2 billion in 2022-23, after having earlier plunged from $43.3 billion to $35.6 billion between 2013-14 and 2019-20. Those prices spilled over into domestic farm realisations. The annual rise in the wholesale price index for “food articles” averaged 6% during Modi 2.0, twice that during Modi 1.0.

In short, farmers benefited from both higher production and better price realisations during Modi 2.0 when compared to Modi 1.0. That, perhaps, explains why agrarian distress hasn’t been as prominent a political theme in this election, relative to 2019. Farmers in Punjab, Haryana and Maharashtra have expressed unhappiness over the Modi government’s MSP policy, marketing reforms and onion export bans. But that’s different from outright anger and anguish over price collapse and back-to-back droughts.

Modi versus UPA

From the table, it can be seen that the farm sector’s average growth during the Modi government’s two terms, at 3.7% per year, has been marginally above the 3.5% over the 10 years of the previous Congress-led United Progressive Alliance (UPA) regime.

What’s interesting about agriculture growth under the Modi government, however, is that it has been primarily animal rather than crop-led. Crop agriculture growth — that includes horticulture, i.e. fruits and vegetables – has actually fallen to less than 2% annually, from 3.4% during the UPA period.

On the other hand, the livestock and fishing & aquaculture subsectors have registered much higher average growth in the last 10 years than in the 10 years of the UPA government. This is also consistent with official household consumption expenditure survey data that points to a rising share of animal products — milk, egg, meat and fish — along with horticulture produce in the total food spend basket of Indians.

It raises an obvious policy issue. The growth of the livestock, fisheries and even horticulture sub-sectors has been largely market and demand driven. The benefits of MSP have, by contrast, flowed mostly to non-horticultural crops — especially rice, wheat, sugarcane, cotton and a few pulses and oilseeds. The demand for making MSP payable by law is also coming basically from farmers of these crops.

Whether the above growth divergence — between “policy” and market-driven sub sectors — would continue and what it means for agriculture as a whole remains to be seen.