The Political Economy of Agricultural Policy Reform in India

60 CHAPTER 6

farmers’ organization associated with the Communist Party of India—Marxist (CPI-M); and Bharatiya Kisan Union (Tikait). These interviews and written sources presenting the organizations’ positions show clearly that though some farmers’ organizations do support certain reforms, the space for a discourse on liberalizing the agricultural sector and reforming the subsidy schemes is fairly limited. Given the overall problems in the farm sector during the past decade, any suggestion of increasing the farmgate price of urea is seen as antifarmer. Even liberal farmers in India point out that the Indian farmer can- not survive in a world in which developing countries are being asked to liber- alize farm trade even as developed countries continue to subsidize their own farm sectors. Some farmers’ groups argue that the government gives them a subsidy only to keep produce prices low. Those in favor of state intervention argue that lower subsidies would have to be associated with higher prices, particularly higher support prices, which would likely increase the price of food and hurt consumers, particularly those who are poor. These farmers also say that they cannot survive if the government withdraws from the market. In fact, faced with the choice between subsidies and larger capital investments by the government in agriculture, most farmers’ groups, predictably, argue that the government should offer both. Although the liberal farmers’ move- ment has moved away from its demand for free markets, it does advocate weaning farmers off the system of government support prices. Although the rural distress of the past decade suggests that farmers as a group are not as strong as they were in the 1980s and 1990s, no Indian poli- tician can afford to ignore farmers or come across as antifarmer. Farmers’ organizations derive their strength from their large numbers, which translate into votes, and from their capacity to organize large-scale demonstrations in cities. The NDA coalition lost the 2004 national elections in part because it was perceived as antifarmer (Suri 2004). In general, farmers’ groups do not depend on electoral strategies to attain their goals. However, electoral con- siderations do play a role because the central government is usually cautious about adopting policies that would jeopardize the prospects of the ruling party in state-level elections.

Fertilizer Producers

Currently, there are 56 large manufacturing units in India that make nitrog- enous, phosphatic, and complex fertilizers. Of these, 30 units produce urea, 20 produce DAP and complex fertilizers, and seven units produce low-analysis straight nitrogenous fertilizers. Nine units make ammonium sulfate, and 72 small and medium-sized units produce single superphosphate (DoF 2007, 7). The 30 urea units form the focal point of this analysis. Fourteen are in the private sector, ten in the public sector, and six in the cooperative sector.

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