Farmer suicides to deficient rains: Modi's hyped reforms agenda to face acid test

Two developments yesterday served as a double whammy for the Narendra Modi government, which is gearing up to celebrate its one year in power next month. First the Met department predicted a below normal rainfall for the current year and then Gajendra Singh, a 41-year-old farmer from Dausa, Rajasthan, committed suicide at an AAP rally, reportedly distressed over the crop loss he suffered due to the unseasonal rain. According to a report in The Indian Express, Singh said his father has expelled him from his home due to the crop damage. “Give me a solution so I can return home,” the report quoted from the suicide letter, which ended with the slogan, “Jai Jawan, Jai Kisan”. [caption id=“attachment_2208452” align=“alignleft” width=“380”] Reuters[/caption] As per the Met projection, the monsoon this year is likely to be 93 percent of long period average (LPA), which is considered “below normal”, owing partly to the El Nino phenomenon. Though the Met has stopped short of predicting a drought-like situation, the projection is far worse than last year’s first projection and signals deeper rural distress this year. In the Met department’s parlance, a normal monsoon is when rain is 96-104 percent of LPA, deficient monsoon is when it is below 90 percent and 90-96 percent is below normal. The monsoon prediction is of larger consequence for the economy, which has just started showing signs of recovery from a protracted slowdown. “A normal monsoon is crucial to push economic growth this year, given weak investment climate, tepid export growth and fragile consumption,” rating agency Crisil has said. But given the gloomy projection by Met, it expects a major adverse impact on the economy. “A second straight year of weak monsoon will decrease the efficacy of India’s irrigation ecosystem and hit agricultural output and farmers adversely. To add to this, unseasonal rains since early March have already had a negative impact on many crops. According to our calculations, a deficient monsoon, if it comes true, will shave off 50 basis points from our GDP forecast of 7.9% for fiscal 2016,” Crisil said in a press release yesterday. Though coincidental, the horrific suicide of Singh, which unfolded in full public view, accords a larger significance to the Met department’s monsoon prediction. It is to be noted that the farmers are already in a difficult situation. Last year’s “deficient” rain at 89 percent of LPA had affected their kharif output. Barely had they managed to get over this, when the unseasonal summer rains started playing havoc, adversely impacting their rabi (summer) crop too, which seems to have incited Singh to commit suicide. What has rendered the situation worse is the spending cuts by the government, which has direct bearing on the subsidies to the rural poor. In this situation, if the monsoon plays truant for the second consecutive year, the discontent among the farming community is likely to worsen, giving more ammunition for the Opposition to attack the government. It doesn’t help a wee bit that the government is already on the defensive due to Rahul Gandhi’s charge over proposed amendments to the Land Acquisition Bill. The billion dollar question to ask is will the emotionally charged political and economic situation halt the reforms which has been hesitantly gaining momentum of late. Analysts and economists, who banked on Modi to take hard economic decisions, seem to be wearing around to believe that it will. “There will be repercussions on the reforms agenda,” Dhananjay Sinha of stock broking firm Emkay told Firstpost. The first and immediate casualty is going to be the Land Acquisition Bill itself. Though the reason for the horrific suicide at the rally was no way related to the proposed law, the opposition’s arguments against the bill have reached a feverish pitch already. In its bid to show that it is not a “suit boot ka sarkar”, the government may also want to dole out more for the rural poor, which is likely to scuttle the reforms and adversely impact the government’s fiscal position. If indeed this happens, Modi will fall out of favour of high-profile investors and corporates. At a time when the economy is struggling back to normalcy, the government cannot afford to lose the confidence of the investors. By all counts, 2015-16 will prove to be an acid test for Modi and his reforms agenda.