Sunday, May 10, 2009

Prosperous farmers hold key to India's election-Reuters

Prosperous farmers hold key to India's election

Sun May 10, 2009 3:32am EDT

Krittivas Mukherjee

RAMBHA, India (Reuters) - Five years ago, India's rural poor threw out the incumbent Hindu nationalist-led government because the slogan of "India Shining" was seen to work only for the urban middle class.

The tables have been turned in the current general election, with large parts of the countryside prospering while urban Indians grapple with the fallout from a global slowdown.

"Life is good, can't complain much," smiles Sahab Singh, a 38-year-old wheat-and-paddy grower, standing arms akimbo in the middle of his 105-acre field in the northern state of Haryana, not far from the capital New Delhi.

He is not the cliched image of an Indian farmer. He is rich, his children go to school in a car and his house is large.

Good rains, government financial assistance and a rural economic boom have put more money in the pockets of millions of farmers over the past five years, spurring sales of motorbikes and mobile phones in a sector accounting for almost two thirds of India's population of more than a billion.

The farm vote may hold the key in the general election, where the relatively new rural prosperity could reap votes for the ruling Congress-led alliance as it battles the Hindu nationalist Bharatiya Janata Party-led opposition.

"Despite the (global) economic slowdown, sales of fast-moving consumer goods have been rising briskly, especially in small towns and rural areas. This is hard evidence of rural prosperity," political economist Swaminathan Anklesaria Aiyar wrote in the Times of India newspaper.

"On balance, the Congress is not badly placed. Even if it loses some seats, it could emerge as the largest single party."

In the absence of an outright majority, as seems likely when votes from the month-long poll are counted on May 16, the party with the highest number of seats in the new parliament is invited to form a government.

The Congress, which ruled India for almost 40 out of 60 years following independence from Britain in 1947, has traditionally had strong support in the countryside. But in recent years, with the emergence of regional and caste-based parties, it has lost that base, throwing open the battle for the rural vote.


To boost rural incomes, the Congress government has waived farm loan repayments, increased the price at which it buys foodgrains from farmers and enacted a law giving a guaranteed 100 days paid labor a year for one adult from each rural family.

"The farming community thinks the Congress has showed more sensitivity. This sentiment will be reflected in their vote," said Kishore Tewari, leader of a farmers' lobby in the western Maharashtra state.

Rural consumers have driven sales. Cement sales have grown at near double-digit rates since November, consumer goods sales also saw support from rural markets and demand for automobiles has firmed after a disastrous December quarter.

In Sahab Singh's house, signs of prosperity abound. His children wear brand-named trainers and expensive sunglasses, the family watches Bollywood films on a big LCD television and he treats guests to crepes and single malt whisky.

Even in the cotton-growing belt of western India, where poverty is endemic, there is recognition of government action.

"The loan waiver and increased MSP (minimum support price for crops) have ensured that farmers get decent incomes, so they are supportive of UPA government," said Anup Jagtap, a cotton and soybean grower, referring to the Congress-led coalition.

If there is a downside, it will be the impact of such fiscal profligacy over the longer term. If the Congress wins on the back of the rural vote, it will have to keep pumping money into the farming sector despite the strain on public finances.

The rural schemes are estimated to have partly pushed up India's consolidated fiscal deficit to about 10 percent of GDP, the highest in years amid a wider economic slowdown.

The other concern is the uneven nature of rural prosperity.

Small farmers and workers continue to complain of a lack of finance, irrigation is a problem and there is corruption even in the distribution of subsidized seeds. Marginal farmers and farm workers are worst hit.

"The Congress party can benefit only in those states where its political machinery can claim credit for its schemes," said political commentator Pratap Bhanu Mehta.

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