Stabilisation Without Transformation: Agrarian Distress and the Political Economy of State Intervention in India

Abstract

Agrarian distress remains a persistent feature of the Indian economy despite sustained and expanding state intervention in agriculture. While farm incomes have risen in nominal terms over the past decade, high levels of indebtedness, cost escalation, and income vulnerability continue to characterise agricultural livelihoods. This paper examines agrarian distress in India through a political economy lens, focusing on how state-led policy instruments shape farm income outcomes without proportionately alleviating structural vulnerability. Using annual macro-level secondary data for the period 2010–2023, the study empirically analyses the role of price support, institutional agricultural credit, public expenditure, input subsidies, irrigation coverage, and climatic conditions. Employing Ordinary Least Squares regression models, the analysis finds that Minimum Support Price relative to cost of cultivation and institutional agricultural credit exert strong, positive, and statistically significant effects on farm income. Fiscal expenditure and input subsidies also display significant income effects, though their influence appears compensatory rather than transformative.
From a political economy perspective, the findings suggest that India’s agrarian policy regime prioritises income stabilisation and political manageability through distributive instruments such as price support, credit expansion, and subsidies. While effective in mitigating short-term distress, these interventions have not adequately addressed deeper structural constraints related to productivity, cost dynamics, and unequal access to institutional support.