Seeds of Unrest: Farmer Protests and Vote Bank Politics

Aadesh Gupta

Indian Agriculture:

India’s incumbent, the Bharatiya Janata Party (BJP), is no stranger to contention. While their tenure is defined chiefly by significant economic growth and socio-religious issues, other policy decisions by the BJP have also invited extensive debate. From demonetising 86% of the country’s currency (1) to introducing electoral bonds for political donations (2), some see these as audacious; some, reckless.

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Still, the backlash was not enough for the BJP to withdraw from their positions, until 2020. The party proposed three farm bills that would allow direct exchange between farmers and buyers by abolishing an enduring tradition of middlemen (3). On one hand, this was sold as a pro-growth move that would unshackle India’s agricultural sector and bring prosperity. On the other, rural communities felt that this let corporate vultures loose, thereby jeopardising their bargaining power and livelihood.

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So in response to these bills, Indian farmers organised the “Dilli Challo” (Let’s go to Delhi) movement, which is now known as the largest protest in world history. Tens of thousands participated, and over 250 million stood in solidarity around the country (4) - a clear depiction of strength in the kisan (farmer) identity among rural communities. In the end, the BJP bit the bullet and backpedalled on their reforms.

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Only last month, farmers protested once again, this time demanding a guarantee on the Minimum Support Price (MSP), a price floor announced by the Indian government but not always enforced. And though this may seem like another struggle for welfare, the interference of political incentives muddies the water.

How Politics distorts Economics:

Government policies are innately political. Cynically put, politicians are first concerned with votes, then any notion of economic well-being. As elections approach, policymakers renounce long term prosperity for short term power, often engaging in myopic fiscal expansions to appease voters even if it necessitates austerity later on. 

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This February in India (only a few months before the general election), farmers protested for a guarantee on the Minimum Support Price (MSP), a price floor for crops announced by the Indian government but not always enforced. Much like other government policies, MSP is equally a political tool as it is an economic one. Enforcing it wins farmer votes and appeases major lobbyists (5). It is, then, understandable why MSP is enforced in certain states but not others, with the former being likely more important to the central government.

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This selective implementation of MSP varies not only by region, but also crops. In particular, the policy tends to favour India’s staple commodities, wheat and rice, over others (6), resulting in them overcrowding storage when the government procures them at MSP. Consequently, the excess is sold off to avoid wastage, resulting in downward pressure on crop prices and therefore nullifying the purpose of MSP as a “support price”. 

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Such inefficiencies in MSP implementation validate recent farmer protests, but political parties can interfere with these as well. In particular, opposition parties may instigate protests against the incumbent to tarnish their reputation and swing voters their way (7). Interestingly, farmers protesting most fervently in India are from Punjab, a state known for its effective MSP implementation (8). On the other hand, states with worse MSP implementation, like Bihar or West Bengal, saw less protests. One would not expect states where policy is best implemented to protest the most. 

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One explanation for this is farmer awareness of MSP. Punjab is known for its agricultural heritage, making MSP an important tradition for the state and therefore a popular policy among farmers. As a result, opposition parties may find it easier to stir up controversy of incumbents shirking in MSP enforcement within this demographic. Such political incentives obscure the purpose of welfare policies, turning them from safety nets into vote-bait. 

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How Economics explains Politics:

Luckily, economics provides tools to help us better understand these political incentives. Consider a game theoretical approach to the above. There are 2 players: an incumbent party and any opposition. The incumbent can either choose to enforce the MSP, taking on a hefty cost yet winning farmer votes, or leave it be. The opposition can choose to steal farmer support from the incumbent by instigating protests, which also comes with a cost.

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Below are two different games for this situation with payoffs interpreted as electoral gains and losses. The distinction is in the top left quadrant, where both parties play vote bank politics by taking their respective actions. Such a case is unpredictable; both parties are trying to win farmer support so electoral outcomes are ambiguous. Depending on the payoffs of this quadrant, the game changes.

Figure 1 shows a case where parties prefer to go all in and take their actions, resulting in a game called the Prisoner’s Dilemma. Here, the Nash equilibrium, a situation where no one prefers to change their move, is for both parties to take their actions. Alternatively, figure 2 is where parties prefer only to take a decision when their opponent chooses not to, resulting in the Chicken game. The Nash equilibrium here is unstable: both top right and bottom left are equally plausible outcomes when considering both parties.