Modi’s Farm Misadventure Will Hurt Urbanization

Modi’s Farm Misadventure Will Hurt Urbanization

Now that Prime Minister Narendra Modi has sacrificed his poorly designed makeover of India’s farms at the altar of electoral math, there will perhaps be no fresh attempt at reform for a decade. That’s a shame for urbanization.

Agriculture in the second-most-populous nation suffers from many infirmities: Unlike the Japanese rulers of Taiwan in the first half of the 20th century, Britain’s colonial government in India didn’t give tenants secure rights, dooming post-independence land reforms. Holdings are fragmented and uneconomical; crop diversification beyond rice and wheat is poor; subsidies abound but public investment is paltry.

With the 1960s spurt from high-yielding seeds having run its course, farming in India badly needs a fresh productivity boost. As long as 43% of the workforce remains stuck in agriculture to eke out a living, the labor that would power industrialization won’t get released. The household capital that would drive urban growth can’t form in a subsistence economy where cultivation gets the average farmer 27 rupees ($0.36) a day.

The question is, what will deliver this productivity boost — markets or organizations?

Team Modi believed that opening up markets — by allowing farmers to sell produce outside of designated “mandi” yards — held the answer. Farmers, who set