Underlying BJP Losses: Distress & Discontent From Farm to Factory
The Bihar verdict could be just one symptom of a deep undercurrent of unrest sweeping west, north and central India.
Pundits have delivered definitive judgements about why the high-decibel BJP campaign, led by none other than Prime Minister Narendra Modi, flopped in Bihar. Hindsight is always 20-20.
But the verdict in Bihar could be just one symptom of a deep undercurrent of unrest sweeping west, north and central India.
Call it the farming flop-show. Or, if that sounds too flippant, term it agrarian distress. From Maharashtra and Gujarat in the west, to Madhya Pradesh in central India and Punjab, Uttar Pradesh and Bihar, the heartland of India is convulsed by crises on the farm. These have caused incomes to drop dramatically in rurban India, where the vast bulk of our population lives. It has sparked off protests that threaten to destabilise established structures of power.
Two successive years of poor monsoons – which translate into four or six bad harvests in regions that grow two or three crops every year – have taken a massive toll, largely ignored by mandarins in New Delhi. Farm incomes have been hit hard, policy has struggled to react, safety nets – like the UPA’s NREGA scheme – starved of funds.
A Deepening Crisis
- Bihar poll verdict could be a symptom of a deep unrest sweeping west, north and central India
- Maharashtra, Gujarat, Madhya Pradesh, Punjab, UP and Bihar, are convulsed by farm crises
- Farm incomes have dropped sharply while policy has struggled to react
- A BofA Merrill Lynch report says kharif incomes for farmers for 2014-15 fell nearly 6 per cent and may drop another 3 per cent for 2015-16
- The virtual withdrawal of NREGA has hit the poor in UP and Bihar the hardest
- Results of a Crisil survey of 700 companies indicate revenue growth at a measly 1.3 per cent, profits up only 8 per cent
There is plenty of anecdotal evidence to support this, but here is a telling number. In a report published on November 9, a day after the Bihar poll outcome, brokerage BofA-Merrill Lynch reckoned that kharif incomes of farmers for the 2014-15 season fell nearly 6 per cent , and estimated that it would fall another 3 per cent this season. In contrast, during the UPA-II’s terminal year, kharif incomes grew a healthy 13.5 per cent.
The winter, or rabi, crop will come in soon, and returns are again expected to be patchy. In Madhya Pradesh soyabean farmers have seen a dramatic drop in their crop. Punjab, considered the breadbasket of India, is seething with tensions that have their roots in its vast farms. Gujarat’s Patidar agitation, that seemed to have come out of nowhere, reflects the frustration of landholders whose farm incomes were falling, just as other opportunities were shutting doors on them.
In Bihar, many poor families cannot recollect when they last ate dal (lentils) with their meal. The staple now is roti or a bit of rice supplemented by potatoes and green chillies. Dal, the primary source of protein for the poor, is unaffordable at Rs 200 per kg. Arthias, or large traders, in Bihar’s mandis say they have cut back on storing dal – there is no demand to justify holding costs.
After its lost decade of the 1980s, Punjab is seething again. The apparent reasons are anger with the kleptocratic Badal family, the Akalis’ ham-handed efforts to pacify its supporters and the vandalising of the Sikh holy text, the Granth Sahib, in various parts of the state. The alleged culprits are supporters of the BJP, which rule in coalition with the Akalis.
Farmers are angry with New Delhi for keeping procurement prices for rice, its main crop, low; and with the BJP-Akali regime for selling adulterated pesticides that couldn’t ward off the white fly pestilence that wiped out this year’s cotton crop. For more than 20 years now, Punjab’s crop productivity – and incomes – have stagnated.
During 14 of the last 25 years, Badal has been in power in Punjab and followed myopic policies that give free electricity and cheap fertiliser to help squeeze more out of the same land, instead of encouraging farmers to diversify to other crops or to industry.
Uttar Pradesh and Bihar have been waiting for the second Green Revolution for nearly half a century, with no support from New Delhi or state governments. But what has hit the poor in both states the hardest is the virtual withdrawal of the UPA’s NREGA programme. Many farmers in Bihar refused to believe that the programme was still in existence. Their disbelief is justified – the Centre today simply budgets for this scheme on paper, but delays or refuses to release money to states that need it the most. This is supported by evidence in the form of admissions by the Ministry of Rural Development and revelations by the Comptroller and Auditor General’s office.
This season and the earlier one saw income from vegetable production drop by 4 per cent and 6 per cent respectively according to BofA ML. Dairying is reckoned to be a bright spot, with incomes growing 9 per cent and 14 per cent respectively this year and the last. Yet, this might not last.
Bans on the slaughter of cattle imposed in states like Gujarat, Maharashtra and Haryana, where the BJP is in power, will take a heavy toll on dairy farmers. Cattle become unproductive after about 18 years, but live another 10 years. Without the option of selling unproductive cattle for slaughter, the herder will have to shell out a minimum of Rs 10,000 per year to keep each animal alive.
Unfortunately, what hurts farms returns to bite factories. Quarterly numbers for listed companies have been miserable for the last two years. April-September (Q2) figures are still being released, but a Crisil survey of 700 companies’ results throws up a dismal picture – revenue growth at a measly 1.3 per cent, profits up only 8 per cent, that too driven primarily by IT, services and pharma exports which have gained from a weak rupee.
From its one year high, stocks of India’s 30-most valuable companies are down 14 per cent. The big losers are FMCG companies, makers of tractors and two-wheelers, fertilisers and so on, that rely on rurban demand to drive sales and profit growth. As hinterland incomes are squeezed, companies bear the brunt of depressed demand.
Till the Modi regime in Delhi and BJP governments in states understand this deep undercurrent of disaffection, they are likely to get the same treatment meted out by voters in Bihar.
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