The Myths and Reality of a Protest

IT WAS TOO good to be true when Union Minister of Commerce and Industry Piyush Goyal told reporters in Chandigarh that talks between farmers and the government were held in a cordial atmosphere and that a possible solu­tion to the farmers’ agitation was at hand. Goyal, and two oth­er Union ministers, had offered a crop diversification plan for the state that finds itself in an ecologically and financially difficult situation. Central agencies like the National Agricultural Cooperative Marketing Federation of India (NAFED) and the Cotton Corporation of India (CCI) would purchase pulses and oilseeds from farmers at the government announced minimum support prices (MSP) for five years.

The leaders of the farmers, who had gathered under the ban­ner of various splinter groups of farm organisations, were to get back to the government in two days on these proposals. Then, as was expected by many, these leaders of 14-odd groups rejected the offer. They then demanded that all barriers on their way to Delhi be removed and they be allowed to enter the national capital.

There was a sense of déjà vu in all this, reminiscent of the multi­ple rounds of ‘negotiations’ between ‘farmers’ and Union ministers back in 2021 that went nowhere. The Centre had to back down.

‘Negotiations’ between agitating farmers from Punjab and the Centre have a strange quality to them. They are not about arriving at some median ground between parties that want to solve a problem; they are in the nature of a diktat where a group that wields street power tells the government what to do. Invari­ably, they lead nowhere. This time, too, matters are not different.

By Monday, February 19, the farmers had begun preparations to ‘strike’ at Delhi. Earthmoving equipment, tractors and trol­leys had been amassed in great numbers at the Shambhu border near Rajpura in Patiala district of Punjab. It did not matter that the next day the Punjab and Haryana High Court said in an order that, legally, farmers could not ply such heavy equipment on a highway for a protest.

The agitators halted their march to Delhi on Wednesday, February 21, for two days and are ‘assessing’ their strategy after a 22-year-old farmer died allegedly at the hands of Haryana Police. At the same time, the agitation has been harrowing for Haryana Police. Manisha Chaudhary, an assistant inspector general, de­tailed how the agitators mixed chilli powder with stubble near the border between Haryana and Punjab and set it on fire. This was clearly meant to make policing difficult for Haryana Police. This happened even as the Punjab government in its response to a Union home ministry missive on maintaining law and order said that “there is a need to show more empathy towards the farmers.” More friction cannot be ruled out in the coming days.

There are two distinct features of the current farmers’ agita­tion. The politics of the agitation is one thing but the economics of the farmers’ discontent is something completely different.

The supposedly ‘economic’ demands of these farmers in­clude the ‘legalisation’ of MSPs for 23 crops across India (and not just Punjab), pension of ₹10,000 per month for farmers above 60 years of age, India’s withdrawal from the World Trade Organization (WTO), compensation for farmers who died in the first agitation back in 2021, changes in electricity laws, arrest of a Union minister, and more.

THE KEY DEMAND here is the legalisation of MSP for 23 crops, which is announced by the Centre based on the rec­ommendations of the Commission for Agricultural Costs and Prices (CACP) every year. This has been understood dif­ferently by different people. Some activists and economists have claimed that this does not mean the government will be bound by law to purchase and pay for every single grain produced by farmers. But this is a facile argument. Back in 2021, some of the activists behind the protest had penned lengthy arguments show­ing how ‘legalisation’ of MSP would only cost a small fraction of India’s GDP. This, they maintained, was necessary for farmers’ welfare. The tone and the very substance of their argument have changed now. The claim now is that the government does not have to buy the entire crop produced by a farmer but has only to pay the difference between the market price and MSP in case the market price falls below MSP. Some individuals have cited a report prepared by a private-sector credit rating agency that says this cost won’t be more than ₹21,000 crore every year.

These claims and counter-claims apart, this is not how the agi­tating farmers see the ‘legalisation’ of MSP. From their perspective, legalisation means the government is by law bound to buy the last bit of what they produce. From that perspective, the ₹21,000 crore per year is likely to be nothing more than a drop in the fiscal ocean.

The farmers are also demanding the implementation of the ‘Swaminathan formula’ for MSP. This is a myth that has propa­gated itself over time. The National Commission on Farmers (2004-06) chaired by the late MS Swaminathan had made a com­prehensive set of recommendations on India’s agriculture. One recommendation was that MSP should be at least 50 per cent more than the weighted average cost of production.

This recommendation and its fate should be seen closely.

India does not have purely market-determined prices for crops. This is a situation that has evolved since World War II in the dying days of British rule in India. At that time the colonial government wanted to control supplies of commodities to fur­ther the war effort and prevent black marketing. A series of price controls was launched and these controls continued well after India gained independence. What changed was the rationale: remunerative prices for farmers and stable prices for key com­modities like wheat, rice and sugar for consumers.

The result, even today, is that it is impossible to determine purely demand and supply-driven market prices for crops like wheat and rice, and these remain heavily regulated. The set of three farm reform laws passed in 2020 would have furthered the price discovery process for these crops but an unholy com­bination of some farmers—mostly from Punjab—and activists worked overtime to scuttle those laws.

The result was that the government continues to rely on prices estimated by a plethora of agencies: state universities, agriculture departments, and CACP. These prices range from the A2 price that estimates all costs borne by a farmer, such as on seeds, fertilisers, pesticides, hired labour, fuel, etc, to the A2+FL price that adds the imputed value of family labour in the crop production process, and finally the C2 cost that is a more comprehensive measure including the rental value of land, fixed assets, etc.

In 2018, the Modi government began using the A2+FL pric­ing formula to give farmers a higher level of MSPs. In 2014, the Bharatiya Janata Party (BJP) had promised that it would give farmers MSP that was 50 per cent more than the cost of production of crops. In a debate in Parliament, then-Union Finance Minister Arun Jaitley had said, “The proposal given in the Budget aims at providing MSP to farmers. MSP is fixed by taking into consideration the input cost, labour cost. A2+FL and [the farmer] gets 50 per cent more.”

At that time, this was criticised as being “too little, too late”. But as always, the claims of activists and the reality were different.

The one agency that can speak authoritatively on the issue, CACP, has been sidelined in the entire debate. If one examines CACP’s reports ‘Price Policy for Kharif Crops: Marketing Season 2023-24’ (issued in March 2023) and ‘Price Policy for Rabi Crops: Marketing Season 2024-25’ (issued in July 2023), then it is evident that claims made by farmers and activists and agitating farmers are nothing but lies.

Consider the production prices and MSP for wheat and rice in the case of Punjab—the ‘anarchy central’ as it were of In­dia—and it is clear that farmers in the state are not just getting 50 per cent more than A2+FL costs but pretty much close to 50 per cent more than C2 costs. In 2023-24, the A2+FL cost for common grade paddy (unhusked rice) in Punjab was ₹864 per quintal. The C2 cost was estimated to be ₹1,462 per quintal. CACP recommended MSP for 2023-24 at ₹2,183 per quintal. In nominal terms, this was just a 7 per cent increase in MSP over 2022-23. But if one looked at Punjab’s costs of cultivation, this was a whopping 152.66 per cent over the A2+FL cost and 49.3 per cent over the C2 cost, pretty close to the mythical “Swaminathan price”.

Something similar can be seen in the case of wheat. In Pun­jab, the A2+FL cost for wheat in 2024-25 rabi marketing season is estimated at ₹832 per quintal while the C2 cost is estimated at ₹1,503 per quintal. The MSP recommendation of CACP for 2024-25 is ₹2,275 per quintal. Viewed thus, a farmer in Punjab gets 173.4 per cent more than the A2+FL cost and 51.36 per cent above the C2 cost.

From an economic perspective, there is no case for agitation by Punjab’s farmers. But as anyone knows, agitations in India are never driven by rational causes and this is especially true of Punjab, a province with a history of secessionism and one that is currently facing severe law and order problems.

In the period between the withdrawal of the three farm reform laws by the Centre in late November 2021 and the present day, Punjab has seen hundreds of road blocks, railroad blockades, and farmers agitating at the drop of a hat. The situation had begun building up even before the resignation of then-Chief Minister Amarinder Singh in September 2021. The Punjab government has been powerless to check these farmers. At one time, even cur­rent Chief Minister Bhagwant Mann’s private residence in San­grur was besieged by so-called farmers. If one looks at the scope of these agitations, they have ranged from the forced closure of a distillery in Ferozepur, the abandonment of plans to build a textile park in Mattewara in Ludhiana district, and a spate of protests against toll roads in the state. It is as if farmers do not want any economic activity except agriculture funded by the Centre.

This climate of political permissiveness in the state, whereby parties across the spectrum are unwilling to confront the impos­sible demands of farmers, has greatly emboldened them. The Centre’s repeal of the three farm laws, too, inflamed them further instead of pacifying them. The result of all this is that there is no link between any rationality of demands and what is politically possible for these farmers to do. What adds fuel to the fire is the plethora of farm organisations, each with its own geographical sphere of influence in the state. The current agitators include the leaders of the Kisan Mazdoor Sangharsh Committee (KMSC) (led by Sarvan Singh Pandher) and the Bharatiya Kisan Union (BKU) Ekta (Sidhupur) led by Jagjit Singh Dallewal. It is important to note that other BKU factions, such as BKU Ekta (Ugrahan) and BKU (Charuni), have their own distinct plans and have not been part of the current agitation. As it happens, Gurnam Singh Charuni—a radical BKU leader based in Haryana—decried the proposal made by the Union ministers on Sunday, February 18, and demanded that coarse cereals like bajra and oilseeds, too, be purchased at MSP. Charuni said that because leaders from Punjab were in control of the agitation, the legitimate interests of farmers from Haryana were being ignored.

Not to be outdone by KMSC and BKU Ekta (Sidhupur), BKU Ugrahan protested outside the homes of BJP leaders Sunil Jakhar in Abohar town of Punjab, Amarinder Singh in Patiala, and Kewal Singh Dhillon in Barnala over the weekend.

The result of this ‘competitive anarchy’ is that the Centre has no credible interlocutors with whom it can engage in a serious con­versation about genuine demands. This is not very different from Punjab’s period of secessionism. Ultimately, drastic steps had to be taken to meet that situation of anarchy. This time, too, the situation has eerie parallels even if the conditions are somewhat different.

The trouble for the Centre is that once collective action barriers get lowered below a point and ‘farmers’ in Punjab get emboldened beyond a point, it has few tools at hand to control the situation. The fact that elections are round the corner makes the govern­ment doubly cautious. The so-called farmers and their leaders are fully exploiting this situation.

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