The message from Gujarat
The Gujarat elections hold an important message for Madhya Pradesh and Rajasthan, which do not have the cushion of a large urban economy which is doing well
The results of the Gujarat assembly elections were along expected lines. Nobody was in doubt about the Bharatiya Janata Party (BJP) winning the elections for the sixth time. It was also evident from various media reports that the BJP may not be able to extend its lead over the opposition Congress and may suffer some losses. Both confirm what is already known.
But the Gujarat elections were eagerly watched not just because it is the home state of Prime Minister Narendra Modi and BJP president Amit Shah, but also because they raised issues that will continue to remain relevant for the next two years until the general elections in 2019.
Beyond the numbers, the Gujarat elections were also about core economic issues. While there has been much discussion on the impact of demonetization and the hurried roll-out of the goods and services tax (GST) that generated resentment among a section of traders in Gujarat, the real issue is the distress in the rural economy. This is obvious from the results with BJP retaining its urban base—where the trader community has been dominant—with minor setbacks, but suffering an erosion in rural areas where unrest and dissent have been vocal and severe.
To a certain extent, the resentment against the neglect of the rural economy was reflected in the Patidar agitation, which articulated the lack of educational and employment opportunities for the dominant farmer community in the state. But the resentment that manifested in different forms is not something which is a result of the change of guard in the state, but reflects long-term neglect of the rural economy by the BJP government.
These need to be seen in the context of the performance of the agrarian economy of the state that has consistently outperformed the nation as a whole. But the success of the agricultural growth model was also the reason for the state’s complacency in its approach to agrarian issues.
The growth of the agrarian economy of Gujarat was largely the result of two factors. The first was the spread of irrigation following the Narmada project and also the increase in private investment in irrigation infrastructure.
The second was the performance of cotton, which accounts for almost a third of value-added in agriculture. The growth in yield of cotton following the adoption of BT cotton in Gujarat was accompanied by rising profitability and also the growth in the area devoted to cotton.
Gujarat remains one of the few states where cotton is a dominant crop but hasn’t seen the level of farmer suicides as has been seen in other cotton-growing areas. The state also benefitted from rising cotton prices in the international as well as domestic markets.
International cotton prices increased by almost three times between 2002 and 2011. The growth of irrigation and the rise of cotton as a dominant crop happened around same time at the beginning of the last decade, but also coincided with the beginning of the Modi era in the state. It was this goodwill from a booming agrarian economy that helped Modi maintain his popularity in rural areas.
By the beginning of this decade, the gains from these two factors were more or less exhausted. With no further increase in irrigation and yield of cotton stagnating, the rural economy was already staring at a crisis in the state. But this was ignored.
The tipping point came in 2014, when commodity prices started crashing following the decline in petroleum prices. Cotton prices declined by more than half between 2011 and 2015, resulting in severe stress in the agrarian economy. So is the case of other cash crops such as groundnut, which also saw prices collapse after 2014. This was further aggravated by the monsoon deficit in the last three years, which also hurt productivity in the agrarian sector.
Despite the crisis in Gujarat’s agriculture, rural areas in the state have not seen the kind of farmer protests witnessed in the neighbouring states of Madhya Pradesh, Rajasthan and Maharashtra—all of which have been going through similar agrarian distress. Partly because the livestock economy continued to grow but also because the non-farm economy was responding to the overall growth of the state. Both these engines are now less effective, with rural wages in Gujarat remaining low and seeing a deceleration similar to other parts of the country.
While the BJP may have won the state, the message from the Gujarat election is clear—its policies on rural and agrarian economy have failed to generate the same enthusiasm as its other initiatives. The symptoms of the distress in the rural economy have remained ignored for far too long. While it may celebrate the victory, a careful reading of the results suggest that any such victory will remain temporary unless it takes steps to revive the rural economy.
But there is a bigger lesson for the BJP, which it can hardly ignore. The two states going to polls within a year are Madhya Pradesh and Rajasthan, both of which have seen agrarian distress over time. With the agricultural sector not expected to do well this year, the crisis may deepen further. The Gujarat elections hold an important message for these states, which do not have the cushion of a large urban economy which is doing well.
Himanshu is an associate professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi.
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