India's Modi backs down on farm reforms in surprise victory for protesters

Indian Prime Minister Narendra Modi said on Friday he would repeal controversial farm laws that farmers have protested for more than a year, a significant climbdown for the combative leader.

The sudden concession on the three laws comes ahead of elections early next year in Uttar Pradesh, India's most populous state, and two other northern states with large rural populations.

"Today I have come to tell you, the whole country, that we have decided to withdraw all three agricultural laws," Modi said in an address to the nation.

"In the parliament session starting later this month, we will complete the constitutional process to repeal these three agricultural laws."

The legislation, introduced in September last year, was aimed at deregulating the sector, allowing farmers to sell produce to buyers beyond government-regulated wholesale markets, where growers are assured of a minimum price.

Farmers, fearing the overhaul would cut the pries they get for their crops, staged nationwide protests that drew in activists and celebrities from outside India, including climate activist Greta Thunberg and U.S. singer Rihanna.

Modi's capitulation leaves unresolved a complex system of farm subsidies and price supports that critics say the government cannot afford. It could also raise questions for investors about how economic policy is being overwhelmed by political interests.

Many of the biggest protests are centred around the capital New Delhi, where farmers have been camped by the roadside since last November, demanding the laws' repeal.

Rakesh Tikait, a farmers' group leader, said the protests were not being called off. "We will wait for parliament to repeal the laws," he said on Twitter.

Modi's Bharatiya Janata Party (BJP) government said last year that there was no question of repealing the laws. It attempted to break the impasse with farmer groups by offering to dilute the legislation, but protracted negotiations failed.

Violent turn

The protests took a violent turn on Jan. 26, India's Republic Day, when thousands of farmers overwhelmed police and went on to storm the historic Red Fort in New Delhi after tearing down barricades and driving tractors through roadblocks.

One protester was killed and scores of farmers and policemen were injured.

Small farmers say the changes make them vulnerable to competition from big business and that they could eventually lose price support for staples such as wheat and rice.

The government says reform of the sector, which accounts for about 15% of the $2.7 trillion economy, means new opportunities and better prices for farmers.

The government failed to convince small groups of farmers of its intentions, Modi said in a speech after greeting the country on the birth anniversary of Guru Nanak, the founder of Sikhism.

Many of the protesting farmers are Sikh.

"We welcome the announcement made by the prime minister, but we need to know the government's stand on our other key demand of making (minimum support prices) compulsory for all crops," said Darshan Pal, another farmers' leader.

Minimum support prices are state-set prices at which the government buys rice and wheat from farmers.

The expanded demand for minimum prices on all crops has gained traction among farmers from across the country, not just the northern grain belt.

Opposition parties congratulated the farmers. Rahul Gandhi of the Congress, India's main opposition party, said their firm stand forced the "arrogant" government to concede.

"Whether it was fear of losing UP or finally facing up to conscience @BJP govt rolls back farm laws. Just the beginning of many more victories for people's voices." Mahua Moitra, a lawmaker from the Trinamool Congress Party and one of Modi's staunchest critics, said on Twitter.