Analysis-India's farmer protest fuels opposition hopes of denting Modi's appeal
SHAMBHU, India (Reuters) - When India's powerful Prime Minister Narendra Modi agreed in 2021 to repeal three farm laws aimed at overhauling the antiquated agriculture sector, he seemed to have won over farmers who had been protesting for over 12 months.

But just over two years later, farmers are on the warpath again in the politically sensitive north of the world's most populous nation, seeking legal guarantees for a minimum purchase price for all crops. The protest comes just months before a general election due by May.

Although the farmers' protest is confined to the breadbasket state of Punjab for now, their complaints of falling incomes resonate more widely, highlighting a perception in India's huge rural hinterland that Modi and the ruling Bharatiya Janata Party (BJP) have done too little to support the farming community and raise living standards.

Over 40% of India's 1.4 billion people are dependent on agriculture and many say they have suffered economically under Modi at the expense of their urban counterparts.

While pollsters say Modi's image as a strong no-nonsense leader and his muscular brand of majoritarian Hindu nationalism will almost certainly give him a rare third term in office, the discontent of farmers will be a headache for years to come.

"Since India has failed to move people out of agriculture, unlike most Asian countries, income levels have dropped, and that is why the anger is spilling over," said Uday Chandra, assistant professor of government at Georgetown University in Qatar.

"The current protest will not harm the BJP in elections, but Modi has a really serious issue to deal with in his next term in office."

The protest began earlier this month with hundreds of farmers in Punjab setting out to take their campaign to the capital, Delhi. They were blocked by police and paramilitary troops at Shambhu, at the border with neighbouring Haryana state, about 200 km (125 miles) from the capital.

Authorities set up concrete and barbed wire barricades and laid out rows of metal spikes on the highway to block the farmers' caravan of tractors and trucks.

Clashes between farmers and security forces with repeated cane charges and tear gas grenades dropped by drones have played on television screens for several days. The farmers say at least one protester has died in the clashes while dozens have been injured on both sides.

"Modi has failed to keep his promises, and I am not going back to my fields until our demands are accepted," said Satpal Singh, a farmer from Punjab, wearing a green turban and standing next to his tractor near the Shambhu border.

Singh and other farmers say Modi has ignored a 2016 promise to double their incomes by 2022. Instead, a series of export curbs on wheat, sugar, onion and most rice grades - designed to keep consumer prices under control - has deprived them of access to global markets and more remunerative prices.

READY FOR THE LONG HAUL

India's beleaguered opposition parties, searching for a narrative to counter Modi and dent his carefully cultivated strong-man image, have rallied behind the protesting farmers.

Before the march began, Singh, also a member of the opposition Congress party's farmers' wing, pooled 600,000 rupees ($7,240) from his fellow growers to buy medicine and gas masks, anticipating they would have to brave tear gas shells from the security forces.

The farmers have converted their tractors and trailers into makeshift homes by covering them with tents and tarpaulin sheets and set up community kitchens that are supplied with vegetables and wheat flour from nearby villages.

"We have not been able to defeat Modi, but we have created some disruption for the right reason," said Sukhpal Khaira, a farmer and a senior leader of the Congress in Punjab.

Farmers and opposition leaders say they expect the protest to spread beyond Punjab, just like the 2020/21 movement, believing it would take the shine off Modi's popularity.

The government has held several rounds of talks hoping to placate the farmers, but so far to no avail.

Voters know that Modi's government is committed to helping the poor, and it is making every effort to address farmers' concerns, said Shehzad Poonawalla, a national spokesperson for the BJP.

CRISIS IN THE COUNTRYSIDE

Although the protest is mainly confined to Punjab, farmers from other parts of the country have also cited falling incomes, exacerbated by export curbs, and cheaper imports as signs of a deepening crisis in the countryside.

"Just before harvesting, the government banned onion exports, and prices crashed to 8 rupees a kg from 40 rupees. How do we recover our production costs?" asked farmer Jagannath Ghorpade, who had planted the crop on a two-acre plot in Nashik, in the west of the country.

A sharp reduction in an import tax on edible oils, to 5.5%from 30% in 2021, has led to record vegetable oil imports, has dampened local prices of oilseeds such as soybean and rapeseed, other farmers in western India have said.

Currently the government offers minimum purchase prices only for wheat and rice but here too, there have only been relatively modest increases, said Devinder Sharma, an independent farm and food policy expert.

During the ten years of Modi's rule, government-fixed minimum purchase prices for rice and wheat rose 67% and 63% versus 138% and 122% over the previous decade, government data showed.

The farm sector, which accounts for around 15% of India's $3.7 trillion economy, has grown at an average of around 3.5% a year in the last nine years, compared to over 6% growth in manufacturing and services.

Farm lending has gone up by three times during the last nine years to nearly 20 trillion rupees, according to the central bank. More than half of India's 93 million farm households are in deep debt, with an average of a 74,121 rupees loan for each of the households, according to government estimates.

The pace of growth in real rural wages was around 1% in 2023 after contracting nearly 3% in the previous two years, according to ICRA, the Indian arm of rating agency Moody's, while average salaries in urban areas have been going up by nearly 10% a year.

"The disparity between urban and rural India has widened in recent years, and that imbalance will only get wider if the government does not address the crisis in agriculture," said Arun Kumar, a former economics professor at Delhi's Jawaharlal Nehru University.

"India's policymakers will have to work on a series of measures to ensure that farming becomes viable and rural incomes go up."

(Writing by Mayank Bhardwaj; Editing by Raju Gopalakrishnan)
SHAMBHU, India (Reuters) -     When India's powerful Prime Minister Narendra Modi agreed in 2021 to repeal three farm laws aimed at overhauling the antiquated agriculture sector, he seemed to have won over farmers who had been protesting for over 12 months.