India's Prime Minister Narendra Modi isn't used to backing down. So his move to repeal three contentious laws that have drawn tens of thousands of farmers to protest at the borders of the capital for over a year is significant. It's easily the most serious political setback of his seven years in power.
Almost half of India's 1.4 billion people depend on agriculture for their livelihoods, and Modi's decision last year to abolish the decades-old system of state-run wholesale markets in favor of more private sales - without any warning or consultation with those most affected - was met with immediate fury. Farmers, who make up a powerful voting bloc, said it would place too much power in the hands of large corporations and put at risk minimum price guarantees on key crops like rice and wheat. The government contended that more competition for crops could lead to higher prices for farmers, and make India more self-reliant.
Even a Supreme Court order to temporarily suspend the laws failed to deter the protesters, who stayed on large encampments through a bitter winter, the devastating second wave of Covid, and Delhi's baking hot summer. Protest leaders say more than 750 farmers died during the sit-ins.
But Modi is used to forcing through controversial - and often disastrous - decisions without any political consequence. He abolished 86% of the country's currency without warning in 2016, sending the economy into a spiral, and later won an increased majority and a second term in office in 2019. When the pandemic struck, he announced a nationwide lockdown with just hours' notice, forcing the largest mass movement of migrant labor across India since partition. So his government pushed on regardless, with some supporters labeling the farmers "anti-national" - the slur du jour in India.
This time, though, it seems Modi has met his match.
"The purpose of the new laws was to strengthen the country's farmers, especially small farmers," Modi said in an address to the nation on Friday. "We have failed to convince some farmers, despite all our efforts." He announced the formation of a committee to promote zero-budget agriculture, change cropping patterns and make the minimum support price more transparent. In a marked departure, the group will involve all affected players, including state and federal governments, farmers, agricultural scientists and economists.
It's no accident that Modi chose to make the announcement on the public holiday that celebrates the life of the founder of Sikhism, Guru Nanak. The northern state of Punjab is seen as the birthplace of the religion, and many of the farmers protesting the laws are Punjabi. The symbolism was hard to miss. And with campaigning already heating up for the state polls in the Congress-held Punjab and BJP-held Uttar Pradesh, due early next year, where the farm laws and protests would have played a leading role, Modi was finally pressured to act.
His ruling Bharatiya Janata Party - still smarting from its failed attempt to wrest the state of West Bengal from Mamata Banerjee's All India Trinamool Congress earlier this year, and its defeat in several seats in local polls in the key state of Uttar Pradesh - must be feeling the anger on the ground over the agriculture laws. Combined with the feeling of many in rural India that the government had left them to fight the pandemic alone, that's a lot of cranky voters.
"The BJP need to win UP," Ian Hall, deputy research director at the Griffith Asia Institute and author of a book on India's foreign policy under Modi, told me. "And to do that, they need to set aside distractions - of which there are too many." Along with the protests, there is also now growing backlash in Kashmir, the India-China border tensions, Covid and the economic recovery, he said.
Still, Modi's backdown will not play well with international investors, Hall warned. "They want to see reforms to land and labor and what they see as other restrictive regulations, so this move could damage confidence in the government's capacity to liberalize the economy."
There is no doubt India's agriculture sector needs significant reform. Rice, with its heavy reliance on irrigation, is not suited to the northern climate. Fertilizer overuse is rife around the country, aquifers are depleted and stubble burning contributes to the dangerously high pollution levels across the top of India each winter. But reform takes patience and cooperation, and Modi's presidential style of government has not, until now, played that way.
Defiant to the end, farmers are saying they won't withdraw their protest until the laws are actually repealed in the parliament - a move Modi says will happen later this month. For now, opposition parties like Congress and the Samajwadi Party, which were both critical of the laws and the way they were implemented, are claiming a victory for the democratic process.
Modi was sensible to remove these distractions. Just how this significant surrender of power will play at the ballot box is the next big question.
Ruth Pollard is a columnist and editor with Bloomberg Opinion. Previously she was South and Southeast Asia Government team leader at Bloomberg News. She has reported from India and across the Middle East and focuses on foreign policy, defense and security.
Disclaimer: This opinion first appeared on Bloomberg, and is published by special syndication arrangement.