Farm Bills 2020: An Analysis
As exemplified in the slogan of second Prime Minister of India Lal Bahadur Shastri, ‘Jai Kisan, Jai Jawan’, India has, atleast in theory, tried to give precedence to farmers as an integral part of what makes India. Following the assent of the President to the voice-vote passed Agriculture Bills, popularly touted as the Farm Bills, it is safe to say that it has been divisive, if nothing more. Hailed by pro-reformists in varying proportions as a welcome move to ease the market flow and decried by the opposition along with rampant protests by farmer groups in the streets of Punjab and Haryana, it’s clear to see that the reactions are many and varied. The subsequent exit of Minister of Food Processing Industries and the only SAD representative in the Modi government, Harsimrat Kaur Bandal, alleging it to be detrimental to Punjab’s agriculture sector, and the exit of BJP’s oldest ally, Shiromani Akali Dal (SAD) from the National Democratic Alliance (NDA), has only added to the looming uncertainty. Prime Minister Narendra Modi’s claims of the passing of the bills being a “watershed moment” for Indian agriculture and “doubling” the income of farmers was readily contrasted by opposition parties as a “death warrant” and “anti-farmer”. The seemingly real truth of the situation likely lies between the two polarly differing opinions. Let’s take an objective analysis into what the farm bills entail for the Indian Agriculture sector, the legality of it, and its likely ramifications, among other things.
The Bills
Given below are the names of the said bills in question and simplified explanations for the effect of each one:
- The Farmers Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 (FPTC)
The FTPC bill seeks to break the monopoly of government-regulated mandis (mandi is the Hindi term for market), reduce reliance on APMCs (disintermediation or reducing the influence of ‘middlemen’ or Angadias ) and promote ‘One India, One Agriculture Market’. Intra-state and Inter-state trade are now facilitated freely through this and governments cannot levy barriers like market fee outside APMC (Agriculture Produce Market Committee) areas.
2. The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 (FAPAFS)
The FAPAFS bill provides a legal framework for farmers to enter into written contracts with companies and produce for them. Combined with the first bill, it leaves the market open for private players to join. As per its Preamble, it allows “national framework on farming agreements that empowers farmers to engage with agri-business firms, processors, wholesalers, exporters or large retailers for farm services and sale of future farming produce at a mutually agreed ‘remunerative price’.
3. The Essential Commodities (Amendment) Bill, 2020
It takes away cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. Therefore, these commodities are now free of the Essential Commodities Act restrictions and stand deregulated. However, the central government has retained the right to regulate them under extraordinary circumstances, such as in case of a war, famine, natural calamity, and impose stock limits if there is a steep rise in prices. It enables hoarding and free trade now.
Collective implication and reasons for concern/relief for farmer groups
Firstly and probably most commonly heard, is the concern of revoking Minimum Selling Price (MSP). To understand what MSP is, it is the pre-set rates at which the Central government purchases produce from farmers, regardless of market rates. Most Indian farmers currently sell the majority of their produce at government-controlled wholesale markets or mandis at assured floor prices. Very understandably, the farmers are concerned about why the bill is silent on MSP even as the Prime Minister adamantly guarantees that MSP and floor price will very much be a part of the modified system. In case of failure to negotiate with corporates satisfactorily, MSP and the mandi system can act both as a contingent and a powerful bargaining chip. A sense of security is integral to farmer welfare.
Absence of regulation of the newly involved corporate players is another major area of concern for farmers. Being used to relying on intermediate parties or APMCs, farmers have little-to-zero experience dealing and negotiating with businessmen and hence there is a more-than-small chance of them getting the short end of the stick. Despite the titles of the bills highlighting ‘farmers’, rather than focusing directly on farmer welfare all three bills rely overwhelmingly on supply chain actors to take advantage of the new rules and share their gains with the farmers. A proper and unambiguous framework which lays out the logistics of the said system would go a long way in alleviating concerns.
The effect on mandis and the associated middlemen is up in the air due to ambiguity regarding their future after the passage of the bills. Farmers fear that encouraging tax-free private trade outside the APMC mandis will make these notified markets unviable. Some states also fear losing revenue from mandi fees and cess, as they are major source of income and procurement especially for states like Punjab and Haryana, which is a primary reason for protests being especially vociferous there. As it is a system being followed for quite a long period of time, regardless of its inherent faults or flaws, there needs to be a transition period provided for the change to a newer system or proper co-existence between the old and the new system.
The effectiveness of the reforms may not be uniform for farmers everywhere and might be subject to locational, geographical, educational and a plethora of other factors which are prerequisite for proper cooperation with the corporate sector.
There have been questions about the legality of the whole matter as agriculture does not appear as part of the Union List which the central government has power over. As pointed out by Dr. Faizan Mustafa, Agriculture only appears in 4 areas of the Union List which are — “Taxes on Income other than Agricultural Income”, “Taxes on Capital Value of Assets exclusive of Agricultural Land”, “State duty in respect of property other than agricultural land” and “Duties in respect of succession of property other than agricultural land”. It is evident from the aforementioned entries that power is not vested on the Union Government to make laws regarding Agriculture and hence goes against the quasi-federal system of India. In addition to this, many Members of the Parliament vehemently alleged violation of parliamentary conventions citing the hurried passing of the bill and the lack of time given to properly deliberate on it, including a few members protesting by tearing papers and choosing to sit out of the session.
Increasing corporatization of agriculture has caused wariness in certain people who don’t want a rehash of what demonetization and GST did to the economy.
Parting thoughts
An overhaul of the current agricultural system was definitely due considering how the APMC bills have become anachronistic and the dire need for exposure for Indian farmers - increased exposure leads to increased competition and hence better price and availability. Adding to it, many farmers are already not benefiting from MSP anyway, so how much of a change the new bill can make to it remains to be seen. That said, jumping straight into hasty reforms can do much more harm than good, a concept the present government is no stranger to after the debacle that was the demonetization process. The same government is certainly not unfamiliar with treading a very dangerous line when it comes to legislational and constitutional conventions as evidenced by how it went about the process of abrogation of Article 370 or egregiously sudden and rushed passing of bills and ordinances like in the case of the Citizenship Amendment Bill; the passing of the bill without prior intimation and just with voice vote did not sit right with the Opposition and very rightly so. The Opposition also needs to bring awareness to more pressing structural issues about the bill than the pointless “anti-farmer” and MSP rhetoric as the issue is way more complex than limited to it. Actual measures from the government’s side other than simple reassurances to tackle the concerns raised by farmers would do a lot in reducing the looming uncertainty regarding the bill. Moreover, proper consultation between all concerned parties instead of a unilateral decision from the Centre’s side will help bridge the trust deficit between the states and the Centre. It’d be prudent from the Centre’s side and in the best interests of those vulnerable to the effects of the bill for it to be reviewed by an Expert Committee and collecting farmer groups’ opinions and suggestions regarding the same.
As much as it is step in the right direction for making the Indian agriculture sector more competitive and open up the market, this is not something which should be done with haste, considering it is something even global economic superpowers like the United States have struggled with, and rather should be something more gradual and deliberate with proper systemic planning and structural layout. Lastly, with the prevailing circumstances, the Government would do well to focus on sustenance of the afflicted and vulnerable areas than push for new initiatives to bring about added growth, which is already proving to be a flawed strategy.
Read More
.
.
.
We are now on LinkedIn! Do follow us there!
Follow us on Medium for more for International events, news, MUN tips and tricks, and detailed analysis. Get in touch with us on Social media to stay in the loop -
Facebook| Instagram|Telegram Channel |YouTube|Twitter|LinkedIn.
We also invite guest writers to publish their material via this blog!
