India's Modi backs down on farm reforms in surprise victory for
protesters
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[November 19, 2021]
By Mayank Bhardwaj and Rajendra Jadhav
GHAZIABAD, India (Reuters) -In a surprise
announcement on Friday, Indian Prime Minister Narendra Modi said he
would repeal agriculture laws that farmers have been protesting against
for more than a year, sparking celebrations for what farmers called a
hard-fought victory.
Modi's decision is a significant climb-down for the combative leader and
comes as state elections in politically important grain-belt states
loom.
The legislation - three laws introduced in September last year - was
aimed at deregulating the sector, allowing farmers to sell produce to
buyers beyond government-regulated wholesale markets where growers are
assured of a minimum price.
Farmers, fearing the reform would cut the prices they get for their
crops, staged nationwide protests that drew in activists and celebrities
from India and beyond, including climate activist Greta Thunberg and pop
singer Rihanna.
"Today I have come to tell you, the whole country, that we have decided
to withdraw all three agricultural laws," Modi said in an address to the
nation.
"I urge farmers to return to their homes, their farms and their
families, and I also request them to start afresh."
The government would repeal the laws in the new session of parliament,
starting this month, he said.
The concession on laws the government had said were essential to tackle
chronic wastage and inefficiencies comes ahead of elections early next
year in Uttar Pradesh (UP), India's most populous state and long a key
political battleground, and two other northern states with large rural
populations.
Modi's capitulation leaves unresolved a complex system of farm subsidies
and price supports that critics say the government cannot afford.
It could also raise questions for investors about how economic reforms
risk being undermined by political pressures.
Protesting farmers, who have been camped out in their thousands by main
roads around the capital, New Delhi, celebrated Modi's back-track.
"Despite a lot of difficulties, we have been here for nearly a year and
today our sacrifice finally paid off," said Ranjit Kumar, a 36-year-old
farmer at Ghazipur, a major protest site in Uttar Pradesh.
Jubilant farmers handed out sweets in celebration and chanted "hail the
farmer" and "long live farmers' movement".
Rakesh Tikait, a farmers' group leader, said the protests would only be
called off when parliament repealed the laws.
VULNERABLE TO BIG BUSINESS
Modi's Bharatiya Janata Party (BJP) government said last year there was
no question of repealing the laws. It attempted to break the impasse by
offering to water down the legislation but protracted negotiations
failed.
The protests took a violent turn on Jan. 26, India's Republic Day, when
farmers overwhelmed police and stormed the historic Red Fort in New
Delhi after tearing down barricades and driving tractors through
roadblocks.
One protester was killed and scores of farmers and policemen were
injured.
Farmers say the changes would make them vulnerable to competition from
big business and they could eventually lose price support for staples
such as wheat and rice.
The government says reform of the sector, which accounts for about 15%
of the $2.7 trillion economy, would have meant new opportunities and
better prices for farmers.
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Indian Prime Minister Narendra Modi said on Friday he would repeal
controversial farm laws that farmers have protested for more than a
year, a significant climbdown for the combative leader.
Modi announced the scrapping of the laws in a speech
marking the birth anniversary of Guru Nanak, the founder of Sikhism.
Many of the protesting farmers are Sikh.
He acknowledged that the government had failed to win the argument.
The farmers are also calling for minimum support prices for all of
their crops, not just rice and wheat, a new demand that has gained
traction among farmers across the country.
Some agriculture experts said Modi's reversal was unfortunate
because the reforms would have brought new technology and
investment.
"It's a blow to India's agriculture," said Sandip Das, a New
Delhi-based researcher and agricultural policy analyst.
"The laws would have helped attract a lot of investment in
agricultural and food processing - two sectors that need a lot of
money for modernisation."
The Confederation of Indian Industry (CII), a group that represents
top corporations, had pinned hopes on the laws to pave the way for
modernising India's decrepit post-harvest infrastructure.
Also, the $34 billion domestic food processing sector would have
grown exponentially, thanks to the laws, according to CII.
Another industry body, the Federation of Indian Chambers of Commerce
and Industry, late last year said the laws should spur startups, and
technological interventions would help cut wastage and bring
efficiency in the agriculture sector.
Seizing on opportunities, global and Indian venture capitals have
already started funding agritech startups that aim to run the entire
food supply chain, currently prone to massive wastage, often as high
as four to five times that of most large economies, experts say.
Anil Ghanwat, head of a farmers' union and a member of Supreme Court
appointed farm panel, said the laws promised farmers freedom from
middlemen and their repeal would leave them open to old
exploitation.
The opposition has been keen to take advantage of the acrimony
between farming communities and Modi's party and Rahul Gandhi of the
main opposition Congress party, said the "arrogant" government had
been forced to concede.
"Just the beginning of many more victories for people’s voices,"
Mahua Moitra, a lawmaker from the Trinamool Congress Party and one
of Modi's staunchest critics, said on Twitter.
State elections are also due soon in Punjab and Uttarakhand in the
north.
Modi's party looks well placed to fend off challenges in the next
general election, due by 2024, but in a worrying sign for him, a
regional party swept to power in West Bengal state in May.
(Reporting by Mayank Bhardwaj, Rajendra Jadhav and Krishna N. Das;
Additional reporting by Shilpa Jamkhandikar; Editing by Muralikumar
Anantharaman and Raju Gopalakrishnan)
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