Poverty and politics are as inseparable as the Congress party and the Gandhi family. The Gandhis owe their political growth to the deification of poverty Socialist style while demonising the rich. The subsequent cliche is that the rich are city-born and the poor are in the countryside. Most intellectuals and analysts understand economics using this bipolar equation—reform is anti-rural while sops are rural-friendly. Hence, the Modi government’s agri loan waiver plans are perceived by allies and critics alike as a rurally relevant political move.
However, historical arallels often throw up contradictions. Loan amnesty for farmers by the UPA in 2013, and planned by the BJP now, have different motives. The Congress party was working on its time worn Socialist vote catching premise of populist bribery and rhetoric, while
Modi’s intention is undoubtedly to create a new rural market.
Industrialists like Mukesh Ambani and Shiv Nadar apart, most of the richest Indians are from the countryside. Agricultural class protectionism has concentrated rural wealth in a few hands.
Rich landowners with massive holdings, benami land and a large section of the political class, which proclaim themselves as agriculturists—Rahul Gandhi’s stated profession is ‘agriculturist’—are repositories of rural wealth. This segment goes beyond caste or religion, comprising Brahmins, Kshatriyas, Dalits and OBCs alike. Behind Modi’s demonetisation and farm loan waiver is the intention to tap and tax this wealth and gradually equalisate rural pockets. Of course, it will is also Votenomics—but then he is a politician, not a philanthropist.
Rural monetary schemes like Jan Dhan are bringing economic muscle to rustic India, while exposing black money. The urban market has shrunk, so have jobs. Many big consumer companies and internet providers are already growing players in the countryside. Rural banking is an expanding sector, and rural wealth managers will be the next finance canvassers. Modi’s rural push is, in all probability, driven by market economics. Taxing agricultural income could be the next big step, after bringing land reform through the distribution of estates. A Goldman Sachs report last year ‘India: A Tale of Two Economies—Rural and Urban’, noted while economic growth in cities is steady, increasing consumption is driving rural growth. However, it also observed that “rural investment trends remain subdued.”
Modi is attempting to rectify this imbalance by crafting a new middle class from rural India. After the UP election win, a comment that went largely ignored by Modi watchers, who usually read signals in the colour of his waistcoats, was his appreciation of the pain borne by the Indian middle class during the note ban. Modi’s new rural middle class will not necessarily share culturally global values, but will be inspired by his nationalist philosophy.
Leaders of countries, who revived their economies, cut down foreign business control and corruption; such as Singapore’s Lee Kuan Yew, Turkey’s Mustafa Kemal Atatürk and even UK’s Margaret Thatcher were all nationalists. Modi is cut from the same cloth. By promoting the rural sector, Modi is laying the foundation for nationalist economics. Gandhi said India lives in the villages. If Modi has his way, they will live well.