Time For Populism?

In an election year, the government could succumb to farmers’ demands and risk a rising deficit

Published 6 years ago on Jun 07, 2018 1 minute Read

Farmer protests have become a regular feature since 2017. Last year saw protests in Mandsaur district of Madhya Pradesh, which resulted in police firing leading to the death of five farmers. This year in March, 40,000 farmers walked 180 kilometers from Nashik to Mumbai to demand loan waivers and transfer of forest lands to villagers.

Now, in June too, similar protests are taking place. A 10-day protest has been organised by the Rashtriya Kisan Mahasangh to demand loan waivers, a fixed minimum income to farmers and a better price for their produce. Several farmers across Madhya Pradesh, Gujarat, Maharashtra, Rajasthan, Punjab, Uttar Pradesh and Haryana are protesting by curbing milk and vegetable supply to cities and dumping their produce on the roads.

The protests haven’t turned violent yet, but the scene of milk tankers being emptied on roads, vegetables flung around and farmers walking around with onion garlands are dramatic and attracting attention. The union agriculture minister has claimed that the protests are a publicity stunt, which cannot be ruled out considering the proximity to an election year. Meanwhile, the Congress party is jumping onto the wagon by joining the protests in Gujarat.

Publicity stunt or not, loan waivers won’t be an easy choice to make for the government. Increased waiver will increase the indebtedness of states. India Ratings' estimate shows that the combined fiscal deficit of states in FY18 would come in at 3.0% of GDP (Rs.4.99 trillion) compared with the budgeted 2.7% (Rs.4.48 trillion) of GDP. To add to it, the centre's actual FY18 fiscal deficit was 3.53% compared to the revised estimate of 3.5%. What remains to be seen is whether the government will bite the bullet, succumb to vote bank politics and risk an increase in the FY19 deficit or hold its ground.