Why Modi Made a U-Turn on Changing India’s Farm Laws

More than a year of angry and sometimes deadly street protests by India’s farmers have forced Prime Minister Narendra Modi into the biggest retreat of his seven years in office: the repeal of his attempt to fundamentally overhaul the way farm goods are produced and sold in the nation of almost 1.4 billion people. New legislation would have opened up a decades-old system of state-run wholesale markets to more private sales. But farmers and opposition politicians argued it would leave those working the land vulnerable to exploitation. In a country where more than half the people depend on agriculture for their livelihood -- and with key provincial elections approaching in early 2022 -- it was a message Modi apparently decided he could no longer ignore.

Farming has remained relatively untouched by the push to modernize India; its growth has consistently lagged behind the overall economy for years -- often significantly. (The poverty rate in rural India is about 25% compared to 14% in urban areas, according to World Bank data.) Many farmers rely on the most basic of technologies and own small landholdings that preclude economies of scale. And the wholesale markets they sell their produce into are often disorganized at best, dysfunctional at worst. In some, the federal government’s buying program doesn’t operate, leaving private players as the only option.