Mandi Sadiq Gunj is a village in the Bahawalnagar district of Pakistan’s Punjab province, where cotton sowing is set to begin in a month. There, struggling farmers must shell out PKR 4,500 for a 50 kg bag of urea and PKR 414 per litre for diesel. One could hardly blame them if they looked across the border and wished they were farming in Modi’s India instead. The reason for their envy is stark. Just a few kilometres away in Maujgarh—a village on the Indian side of Punjab—my own son farms under a completely different economic reality.

He pays just INR 266.50 for a 45 kg bag of urea and INR 88.23 per litre for diesel. After adjusting for currency exchange rates, Pakistani farmers are paying a staggering 5.8 times more for Urea and 1.5 times more for diesel than their Indian counterparts. This glaring disparity stands as a powerful testament to the strength and necessity of India’s farmer support systems.

In months, since the war began in the Middle East, the Indian Rupee has devalued 5%, the price of Crude and Urea have risen 40% and 50% respectively. Probably, India is the only country in the world where retail agricultural input prices have remained constant and there is no shortfall of either. This week, the government additionally announced a hike in minimum support prices of kharif crops.

But the pertinent point is the quantum of subsidy going forward is beyond belief and logic. A farmer pays INR 266.50 & INR 1,350.00 for a bag of Urea & DAP. Since the beginning of the conflict, this will entail a subsidy component of INR 4,2229 & INR 3,578 per bag. A typical green revolution farmer growing wheat and paddy uses about 8 bags of urea and 3 bags of DAP per acre. The subsidy works out to INR 44,000 per acre. For a small Indian agricultural household cultivating 2.5 acres, the fertilizer subsidy would amount to a mind boggling INR 1,10,000. The measly INR 7,000 of PM Kisan, monthly cash transfer of INR 1,500 to women (in many states) and the value of free electricity pales in significance.

Yet, subsidy is only part of the story. Stanford professor Jeffrey Pfeffer’s core tenet “Success excuses everything’ is misplaced. Modi’s political success cannot mask the economic reality that the Indian debt & foreign exchange position will not allow for endless subsidies. India’s whole could end up being less than the parts.

The issue for BJP is not that ‘deliverism’ is failing in India. Instead of tracking actual ground sentiment, the BJP has internalised a narrative of widespread farmer resistance to reforms. This fear has forced the government to put agricultural reforms on the backburner. But if the government is ready to subsidize farmers to this large an extent; it opens the door to go back to the drawing board to redraw the whole agricultural canvas from scratch. Where we are not inhibited with a tunnel vision of a legal MSP or of repurposing subsides or the idea of cash transfers to replace subsidies, but to prioritizing environment and livelihoods. Where reforms and transition entail manageable political fallout.

Lack of conviction in their own delivery, makes risk-eversion rife among political parties and government. Thus, Indian economy faces a “paradox of risk” — in seeking to avoid risks, we amplify them and miss out on reforms. No piece of legislation can fix the problem. Whatever ability India had, is vanishing with politics of populism, regionalism, nationalism and misgovernance across states. The best possible outcome is that things don’t get any worse.

There is a lack of fiscal seriousness across much of India’s political class. It’s not that they don’t understand how subsidies hamper development and incentives generate growth. They rank their core objectives in a fundamentally different order. Political parties like the Congress, TMC, SP or AAP prioritize their own leaders; Rahul Gandhi, Mamta Banerjee, Akhilesh Yadav, Arvind Kejriwal, while for the RSS, BJP and Modi himself, the party takes precedence. Unlike the rest, because the BJP is playing the long game, there is a higher probability of major agricultural reforms. They understand that the past is, after all, never really past.

We are only beginning to grasp what lies ahead and the PM’s recent appeal for austerity and quiet admission of dependence points to something deeper. There is so much more than just inflation to worry about for the government, for the BJP and for the people. END