Indian Agrarian Crisis now moved to

Farmer-the most endangered species

Two views

Posted by Ramoo on January 28, 2007

Prabhat Patnaik

THE fact that there is a crisis in India’s countryside, notwithstanding all the talk about “India shining”, can scarcely be denied any more. The prime minister’s visit to Vidarbha marked an official recognition of it. There are nonetheless two diametrically opposite views on the nature of the crisis and on the steps needed for its resolution. One view, which represents the official position of the central government, sees it exclusively as an agricultural crisis, i.e. the crisis of a sector, which is afflicted by output stagnation, low productivity, and low levels of investment. The other, which represents the Left perspective, sees it as an agrarian crisis, i.e. the crisis of certain agrarian classes, arising out of the relationship of these classes to other classes, in the context of the neo-liberal policies. One view stresses the materiality of the agricultural sector while examining the crisis; the other stresses social relations, the relations between classes unfolding in the era of globalisation.

Karl Marx had always been insistent that the essence of scientific political economy was the analysis of social relations and the changes in them. The sort of analysis which focused exclusively on the materiality of objects, on things rather than relations, or on “use values” (and correspondingly on concrete labour) as opposed to exchange values (and correspondingly on abstract labour), was castigated by him as “vulgar economy”. The official approach to the understanding of the crisis in India’s countryside therefore is mired in “vulgar economy”.


Let us turn now to an examination of the differences between the two approaches. The official or “vulgar economy” approach argues as follows. The reason why there is an “agricultural crisis” (which, as mentioned, is the way they perceive the crisis) is because there is insufficient investment in agriculture, insufficient “modernisation” of the sector, and a level of “efficiency” (and productivity) that is too low for international competitiveness. It follows from this analysis that if investment is pumped into this sector, if “modernisation” is carried out raising this sector’s “efficiency”, then it can grow more rapidly and also become competitive internationally. Since the most obvious way of attracting more investment into this sector, and bringing about “modernisation” of it, is by opening it up for corporate capital, both domestic corporates and MNCs, which can introduce “contract farming”, which can themselves take over land for estate farming, and which can alter the production structure to respond to the pattern of global demand, we should encourage such “corporate agriculture”. For this purpose, marketing outlets such as what the Ambanis have been planning should be permitted; tenancy legislation should be amended to remove all barriers to leasing out land by those who wish to do so (which, like in the colonial period, would enable corporate capital or its agents to acquire land as tenants); and ceiling legislation should be done away with. The focus in short is either on corporate agriculture as such, or on corporate-driven agriculture through institutions like “rural business hubs” etc.

As against this approach, the Left approach sees the crisis in agriculture as a crisis afflicting the peasantry, which in turn is a part of the crisis of petty production. Capitalism tends to destroy petty production. The survival of petty production in the era of capitalism is made possible by deliberate intervention by the State through price support, “reservation” against competition, subsidies, import tariffs, and State procurement of the marketed surplus of such producers. In the case of the peasantry, the entire set of measures that we had in India, ranging from priority sector lending by banks, to differential interest rates on bank loans, to procurement at CACP-determined prices, to quantitative restrictions on imports, to subsidized inputs, to State-provided extension services, to controls on land-use and checks on subletting of land, was meant to provide such support. This was done in the interests of strengthening the base of capitalist development, of the sort that was being attempted in India in the post-Independence period, by providing it with crucial petty bourgeois support.

Of course, such support to petty production did not rule out the development of capitalism in agriculture. On the contrary, there was a strong tendency towards the development of both landlord capitalism (“from above”) as well as peasant capitalism (“from below”) under this dispensation, on which much has been written. But that trajectory of capitalist development is fundamentally different from the development of “corporate capitalism” in agriculture, through large-scale expropriation-cum-subjugation of the peasantry, which is being promoted now. This latter entails the withdrawal of support by the State to petty producers which is the hallmark of neo-liberal economic policies. Such withdrawal is clearly discernible in the period since the end of the eighties, and the peasantry is faced with the current acute crisis because of this. 


The crisis is all the more acute because the pursuit of neo-liberal policies all around the world has resulted in a slowing down of the growth of world capitalism, which has entailed a turning of the terms of trade secularly, through fluctuations, against the primary producers; the peasantry in our country, being exposed to the world market precisely at this juncture, has been hit particularly hard. The crisis therefore is an outcome of neo-liberal policies pursued in the interests of international corporate capital in general, and international finance capital in particular. And if the misery of the peasants is the result of exposure to the policies that favour corporate capital, then the induction of corporate agriculture can only compound that misery further. Far from being the panacea for agrarian crisis, corporate agriculture can only exacerbate that crisis.

The vacuity of the official position that denies any link between neo-liberal policies and the agrarian crisis is demonstrated by the sequel to the prime minister’s Vidarbha visit. Acknowledging the role of indebtedness in farmers’ suicides, he made certain announcements providing relief in interest payments on accumulated institutional debt. And emphasizing that the distress of the farmers had to do with the lack of “development” of the agricultural sector, he made certain announcements about schemes for increasing output. But what he did not do, despite repeated pleas from the peasant leaders assembled to meet him, was to provide for an increase in the import duty on raw cotton which would have arrested the price fall experienced by the peasantry and hence restored, to a degree, the viability of cotton growing, which alone is the pre-condition for any investment on the part of the peasantry. He did not raise import duty because that would have gone against the entire neo-liberal policy of eliminating trade restrictions. As a result of his silence on the basic price issue, even after his visit, hundreds of suicides have continued to occur in the Vidarbha region.

All talk of “investment”, “productivity increases”, “modernisation”, and “competitiveness”, if it refers to the context of peasant agriculture, becomes totally meaningless in the absence of price and other kinds of State support, since the peasantry will not undertake any investment in its current state of unviability. On the other hand, if such talk refers to corporate agriculture (which it usually does), then, far from reducing the misery of the peasants it will only compound it.


The proponents of neo-liberalism usually put forward an additional argument. And this states that in the long run the only solution to the problem of poverty and unemployment afflicting the agricultural economy is to bring about a shift of the agriculture-dependent population to manufacturing and other non-agricultural pursuits. Instead of shedding tears over the demise of traditional agriculture therefore we should be hastening this demise. Indeed those who wish to protect the peasants by persisting with the “inefficiency” of peasant agriculture, are really the enemy of the peasants, since they are only perpetuating an abysmal state of affairs. 

This argument, apparently so sympathetic to the peasants, would be perfectly valid, if the peasantry, displaced through the promotion of “efficient” agriculture under the aegis of the corporate sector, could actually find alternative employment outside of agriculture. But under the neo-liberal dispensation, even when the country experiences close to double digit growth rate, its unemployment rate actually goes up. Indeed, such is the nature of this growth that even during the period when the growth rate has apparently doubled, the rate of growth of organised sector employment has actually been lower than in the period before liberalisation. Hence the apparent sympathy for the peasants that neo-liberal spokesmen display is in fact a complete sham, a camouflage for ushering in corporate control over the agricultural economy.

The Left’s view on overcoming the crisis of the countryside accordingly has, as its starting point, the prevention of a corporate-induced decimation of the peasantry, through a protection and nurturing of peasant production. But this nurturing, to be sure, requires organisational changes, away from atomised, individual farming with dubious resilience. The direction of movement however cannot be corporate agriculture but co-operative and collective forms in which the peasants will have to organise themselves, to take advantage of the economies of scale, to acquire greater bargaining strength, and to ensure that technological change, even when it reduces labour demand, does not cause destitution, since the very owners whose profits increase as a result of such technological changes are the peasants themselves.

“Investment”, “modernisation”, “efficiency” and “productivity increases” are terms which have to be looked at within a class context. Then, instead being used as excuses for ushering in corporate dominance into agriculture, they can point to the appropriate organisational forms through which the mass of peasant population that has nowhere else to go, that cannot be absorbed elsewhere, that faces ruin and destitution, can still survive and prosper.

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