There is an important nuance in the current wave of rural distress—its main victims are the landed rather than the landless. As economist Pranjul Bhandari points out in a recent research note, the year 2016 saw plentiful rains coming after two consecutive years of drought. The prospects of a good harvest pushed up the demand for farm workers. Rural wages rose. The subsequent crash in food prices hit those who owned land, especially those who are indebted. The landless benefited from higher wages.
The political impact is clear. The castes who dominate the farm economy have been mobilizing because of the collapse of the prices of their farm produce. The castes that earn most of their money from wages have not taken to the streets. The United Progressive Alliance tried to deal with the problem by engineering a shift in the terms of trade through large increases in minimum support prices. The result was high inflation. The Narendra Modi government has spoken of the need to double farmer incomes. That is easier said than done.
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