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Insights into Editorial: Seeds of hope: On farm laws repeal

 

Context:

Prime Minister Narendra Modi announced the repeal of the three contentious farm laws.

Farmers, mostly from Punjab and Haryana, have been protesting against these laws at the borders of Delhi since November 26 last year.

PM Modi has done the right thing by announcing the repeal of the three farm laws that are at the centre of a protracted confrontation between his government and a section of farmers for a year.

 

What were the farm laws that have been repealed?

  1. The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, which is aimed at allowing trade in agricultural produce outside the existing APMC (Agricultural Produce Market Committee) mandis;
    1. It seeks to create an ecosystem where the farmers and traders enjoy the freedom of choice relating to sale and purchase of farmers’ produce.
    2. The reform grants freedom to farmers and buyers to transact in agricultural commodities even outside notified APMC mandis ensuring competitive alternative trading channels to promote efficient, transparent and barrier-free interstate and intra-state trade.
  2. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, which seeks to provide a framework for contract farming;
    1. It seeks to provide for a national framework on contract farming that protects and empowers farmers in their engagement 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 in a fair and transparent manner.
  3. The Essential Commodities (Amendment) Act, 2020, which is aimed at removing commodities such as cereals, pulses, oilseeds, edible oils, onion and potato from the list of essential commodities.
    1. It seeks to remove commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities.
    2. The reform ends the era of frequent imposition of stock-holding limits except under extraordinary circumstances.

 

How farmers managed to sustain farm law protest for a year?

It is being called the longest agrarian movement in independent India. The agitation against the three farm laws passed in September 2020 started in Punjab, but gradually spread to the neighbouring state of Haryana and parts of Uttar Pradesh.

But it caught the eyeballs of the nation only when farmers marched to the Delhi borders on November 26 last year.

Many thought they would return after registering their protest, but they set up a little township of sorts, weathering the cold winter and the searing summer.

But there was a method to this madness despite the multiplicity of unions and ideologies participating in the agitation.

 

What is the procedure to repeal a law in India?

  1. The law can be repealed by the government in two ways;
    1. First to bring a Bill to repeal the three laws, and
    2. Second is to promulgate an ordinance that will have to be consequently replaced with a Bill within six months.
  2. According to the former Union Law Secretary P.K. Malhotra “For repeal, the power of Parliament is the same as enacting a law under the Constitution.”
  3. Article 245 of the Indian Constitution empowers the Parliament to enact as well as to repeal any law.
  4. That is, the Parliament has the power to make laws and also to repeal them through the Repealing and Amendment Act. In 1950, the first Act was passed and 72 Acts were repealed.
  5. In 2019, Repealing and Amendment provision was invoked when Union Government scrapped 58 obsolete laws and made minor amendments to the Income Tax Act, 1961 and also the Indian Institutes of Management Act, 2017.
  6. Narendra Modi led government already scrapped or repealed around 1,428 Acts during its first term.
  7. Like any other Bill, the Repealing and Amendment Bill will pass in the same way as any other Bill. It will have to be passed by both Houses of Parliament and the President’s assent will be required to make it a law.

 

Government arguments at that time of introducing the laws:

The laws sought to reorganise India’s agriculture sector more in accordance with the principles of market economy.

They would have redesigned the country’s food procurement and distribution mechanisms, triggering fears that the producers and consumers would be adversely affected, to the benefit of big companies.

Such fears were aggravated by the undemocratic manner in which these laws were brought about, through ordinances, and passed in Parliament without deliberations, or consultations with the States.

 

MSP foul play:

 

  1. This monotonous cycle of wheat and rice should anyway be broken as it is not sustainable. It is making our soil devoid of nutrients and also depleting the water table.
  2. Moreover, MSP as a practice should be done away with as the Food Corporation of India (FCI) incurs huge losses on account of procurement and storage.
  3. Since MSP is only available in Punjab and Haryana, traders buy grains from Uttar Pradesh and Bihar at less than half the price and sell it to the government in Punjab and Haryana at MSP.
  4. If you combine the total procurement and compare it to the land under cultivation, it comes out that the average yield per acre is much more than the actual yield possible. This foul play has been going on for years.
  5. There is a gap in prices of market and the MSP because the grains are in abundance, as soon as the amount of grains is reduced, the prices will automatically go up.
  6. Talking of the current standoff, the government has bent as required and now the farmers should also come to the discussion table as the demand to repeal all the laws is not wise and they have gained what was initially required.
  7. This kind of protest was necessary to tell the current dispensation that their way of passing laws is not legitimate, which has been happening over the last few years.
  8. If we see the origin of MSP, it came as an incentive to adopt new methods of green revolution. Now when the government wants farmers to shift to other crops, it should begin by giving incentives to the farmers for that.

 

Major problems that need to address:

  1. Some major problems of farmers, and Indian agriculture in general, are that the yields are much lower than the global average, the economic condition of farmers is much worse and there is very little adoption of new technologies.
  2. The major reason for this is the non-availability of free and open market to farmers, since the average landholding size is less than 1 hectare (2.4 acres).
  3. So, the farmers are reluctant to buy new machinery and adopt latest methods and continue with traditional farming requiring large human labour.
  4. This is evident from the fact that there is a huge gap between the percentage of population engaged in agriculture and percentage of contribution of GDP by the agriculture sector.

 

How does the repeal impact the political economy of rural India?

  1. There may be some deficiencies in the exact design and mechanism of the reforms proposed in the three farm laws, but most advocates of agricultural reform would agree that they were in the right direction.
  2. That the government chose to push these reforms through its own set of consultations left many stakeholders feeling left out, and created a backlash.
  3. The repeal underlines that any future attempts to reform the rural agricultural economy would require a much wider consultation, not only for better design of reforms, but for wider acceptance.
  4. The repeal would leave the government hesitant about pursuing these reforms in stealth mode again.

 

Conclusion:

It was a concern that the overall thrust of the farm laws appeared to encourage the participation of larger corporate players in agricultural markets rather than farmer-friendly organisations, such as cooperatives or Farmer Producer Companies (FPC).

Especially in the case of the amendment of the Essential Commodities Act, there was reasonable suspicion that a handful of corporate players were to substantially benefit from investments in logistics, storage and warehousing.

In bowing to public demand, Mr. Modi has shown flexibility and pragmatism.

Farmers should not only withdraw the protest now but also show a more flexible approach regarding the path ahead to reform the sector.