HPSC HCS exam Three Acts on Agriculture Reforms
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HPSC HCS exam Three Acts on Agriculture Reforms

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HPSC HCS exam Three Acts on Agriculture Reforms 

Introduction 

  • Recently, the President gave his assent to the contentious agriculture Bills that were earlier passed by the Parliament. 
  • The opposition as well as long-time BJP ally Shiromani Akali Dal have termed these reforms as "anti-farmer". 

Let's study about:

  • What are these agricultural bills?
  • Key provisions of it
  • Why farmers and states are protesting?
  • What is Govts clarification on it?
  • What are the pros and cons of it?
  • Questions over the constitutionality of these Act

HPSC HCS exam Three Acts on Agriculture Reforms

The Farmers’ Produce Trade And Commerce (Promotion And Facilitation) Act  2020

  • The Act gives freedom to the farmer to indulge in intra-state or inter-state trade in areas outside the APMC mandis.
  • It also prohibits the collection of any market fee or cess under the state APMC Acts with respect to such trade outside the APMC market yards.
  • A key provision of the Act gives it an overriding effect over the inconsistent provisions of the State APMC Acts.
  • Also, the Central Government has been given powers to frame rules and regulations under the Act.

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Issues involved:

  • This leads to a situation where local farmers do not find adequate demand for their produce at MSP in the local market.
  • Since most farmers are small or marginal landowners, they do not have the wherewithal to transport their produce to large distances. Hence, they are forced to sell them at a lower price than the MSP in the local market itself.
  • In Punjab and Haryana, the epicentre of the protests, the market fee, rural development fee, and arhatiya’s commission are 3%, 3%, and 2.5%; and 2%, 2%, and 2.5% respectively. These are big sources of state revenue — with states not permitted to levy market fee/cess outside APMC areas under the new laws, Punjab and Haryana could lose an estimated Rs 3,500 crore and Rs 1,600 crore each year respectively.

Government’s Claim:

  • The Act allows farmers to sell their produce outside APMC 'mandis' to whoever they want means no middlemen will be involved.
  • Farmers will get better prices through competition and cost-cutting on transportation.
  • These Acts will transform Indian agriculture and attract private investment. 
  • The government has said these reforms will accelerate growth in the sector through private sector investment in building infrastructure and supply chains for farm produce in national and global markets.
  • They are intended to help small farmers who don’t have the means to either bargain for their produce to get a better price or invest in technology to improve the productivity of farms.

HPSC HCS exam Three Acts on Agriculture Reforms

There are two broader concerns here:

  • First, one principle concern with contract farming has been regarding the negotiating power of the two parties involved. It seems likely that individual farmers might not find themselves equipped or powerful enough to negotiate with corporates or big-pocket sponsors to ensure a fair price for their produce.
  • Second, the Bill says that the quality parameters can be mutually decided by the two parties in the agreement. But the quality aspect will become crucial when a few corporates will try to usher in uniformity which might end up adversely impacting the already skewed agro-ecological diversity in the country.
  • The protesting farmers fear that powerful investors would bind them to unfavourable contracts drafted by big corporate law firms, with liability clauses that would be beyond the understanding of poor farmers in most cases.
  • This would lead to corporatisation of agriculture

The Essential Commodities (Amendment) Act 2020

Regulation of food items: The Essential Commodities Act, 1955 empowers the central government to designate certain commodities (such as food items, fertilizers, and petroleum products) as essential commodities.  

  • The central government may regulate or prohibit the production, supply, distribution, trade, and commerce of such essential commodities. 
  • The amendment in the Act provides that the central government may regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances.   
  • These include: (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature.

Stock limit: The Amendment in the Act requires that imposition of any stock limit on agricultural produce must be based on price rise.  

  • A stock limit may be imposed only if there is: (i) a 100% increase in retail price of horticultural produce; and (ii) a 50% increase in the retail price of non-perishable agricultural food items.   
  • The increase will be calculated over the price prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower.

Issues:

  • Any action on imposing stock limits will be based on the price trigger.
  • In case of horticultural produce, a 100 per cent increase in the retail price of the commodity over the immediately preceding 12 months or the average retail price of the last five years, whichever is lower, will be the trigger for invoking the stock limit for such commodities.
  • For non-perishable agricultural foodstuffs, the price trigger will be a 50 per cent increase in the retail price of the commodity over the immediately preceding 12 months or the average retail price of the last five years, whichever is lower.

General concerns and criticisms:

  • These Acts are anti-farmer and will only result in reduced crop prices for farmers and undermine seed security even further.
  • Food security will be eroded as government intervention is eliminated.
  • These Acts promote corporate control of the Indian food and farming systems.
  • They will also encourage hoarding and black marketing, in addition to exploitation of farmers.
  • End of MSP
    • Critics view the dismantling of the monopoly of the APMCs as a sign of ending the assured procurement of food grains at minimum support prices (MSP).
    • To the Centre’s ‘one nation, one market’ call, critics have sought ‘one nation, one MSP’.
    • Critics argue that ensuring a larger number of farmers get the MSP for their produce and addressing weakness in the APMCs, instead of making these State mechanisms redundant is the need of the hour.

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Justification: 

  • This law nowhere states that the current system of minimum support price (MSP)-based procurement of foodgrains (essentially wheat and paddy) by government agencies would end. 
  • Such purchases in state-regulated APMC (agricultural produce market committee) mandis will continue as before. The APMCs wouldn’t stop functioning either; nothing prevents farmers from selling their produce or traders and processors from buying in these mandis.
  • All the law does is provide farmers an alternative platform to sell. This could be a factory premise/processing plant, produce collection centre, cold storage, warehouse, silo or even the farmgate. Transactions in such “trade areas” will not be charged APMC market fee or cess. These levies shall apply only in trades that take place within the boundaries of the regulated market yards or mandis set up under the respective state APMC acts.

No mechanism for price fixation

  • The Price Assurance Bill, while offering protection to farmers against price exploitation, does not prescribe the mechanism for price fixation. 
  • There is apprehension that the free hand given to private corporate houses could lead to farmer exploitation.
  • Critics are apprehensive about formal contractual obligations owing to the unorganised nature of the farm sector and lack of resources for a legal battle with private corporate entities.

Food security undermined

  • Easing of regulation of food items would lead to exporters, processors and traders hoarding farm produce during the harvest season, when prices are generally lower, and releasing it later when prices increase. 
  • This could undermine food security since the States would have no information about the availability of stocks within the State
  • Critics anticipate irrational volatility in the prices of essentials and increased black marketing.

No consultation = Mistrust

  • Several reforms at the level of the central government as well as at the State level have been introduced and welcomed by farmers. However, in this particular case, the issue is not about the Bills; it is also about the process of their introduction. 
  • The government has failed to have or hold any discussion with the various stakeholders including farmers and middlemen. 
  • This is also true when it comes to consultation with State governments even though the subject of trade and agriculture are part of subjects on the State list. 

Question over Constitutionality

What is the question over the constitutionality of these laws?

As per Union of India v H.S.Dhillon (1972), the constitutionality of parliamentary laws can be challenged only on two grounds 

  • the subject is in the State List, 
  • it violates fundamental rights. 

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 do not mention, in the Statement of Objects & Reasons, the constitutional provisions under which Parliament has the power to legislate on the subjects covered.

And where does the question of federalism come in?

  • Federalism essentially means both the Centre and states have the freedom to operate in their allotted spheres of power, in coordination with each other. 
  • The Seventh Schedule of the Constitution contains three lists that distribute power between the Centre and states. 
  • There are 97 subjects in the Union List, on which Parliament has exclusive power to legislate (Article 246); 
  • The State List has 66 items on which states alone can legislate;
  • The Concurrent List has 47 subjects on which both the Centre and states can legislate, but in case of a conflict, the law made by Parliament prevails (Article 254). 
  • Parliament can legislate on an item in the State List under certain specific circumstances laid down in the Constitution.
  • In S R Bommai v Union of India (1994), a nine-judge Bench held federalism is part of the basic structure of the Constitution. 

Where is agriculture in the scheme of legislative powers?

  • Terms relating to agriculture occur at 15 places in the Seventh Schedule.
  • Entries 82, 86, 87, and 88 in the Union List mention taxes and duties on income and assets, specifically excluding those in respect of agriculture.
  • In the State List, eight entries contain terms relating to agriculture: 
  1. Entry 14 (agricultural education and research, pests, plant diseases);
  2. Entry 18 (rights in or over land, land tenures, rents, transfer agricultural land, agricultural loans, etc.); 
  3. Entry 28 (markets and fairs); 
  4. Entry 30 (agricultural indebtedness); 
  5. Entry 45 (land revenue, land records, etc.);
  6. Entry 46 (taxes on agricultural income); 
  7. Entry 47 (succession of agricultural land); 

Entry 48 (estate duty in respect of agricultural land).

  • In the Concurrent List, 
  1. Entry 6 mentions transfer of property other than agricultural land;
  2. Entry 7 is about various contracts not relating to agricultural land; 
  3. Entry  41 deals with evacuee property, including agricultural land.
  • It is clear that the Union List and Concurrent List put matters relating to agriculture outside Parliament’s jurisdiction, and give state legislatures exclusive power. No entry in respect of agriculture in the State List is subject to any entry in the Union or Concurrent Lists.

What about Entry 27 of the State List that is subject to Entry 33 of List III (Concurrent)?

  • Entry 33 of the Concurrent List mentions trade and commerce, production, supply and distribution of domestic and imported products of an industry over which Parliament has control in the public interest; foodstuffs, including oilseeds and oils; cattle fodder; raw cotton and jute. 
  • The Centre could, therefore, argue that it is within its powers to pass laws on contract farming and intra- and inter-state trade, and prohibit states from imposing fees/cesses outside APMC areas.
  • However, like education, farming is an occupation, not trade or commerce. If foodstuffs are considered synonymous with agriculture, then all the powers of states in respect of agriculture, listed so elaborately in the Constitution, shall become redundant.

So what happens in case of legislation that covers entries in two Lists?

  • In cases such as State of Rajasthan v G Chawla (1959), courts have used the doctrine of “pith and substance” to determine the character of legislation that overlaps between entries. The constitutionality of legislation is upheld if it is largely covered by one list and touches upon the other list only incidentally. But the two new farm Acts are beyond that — they impinge on entries in the State List.
  • The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 flies in the face of Entry 28 of the State List (markets and fairs), and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 impinges on Entries 14, 18, and 46 of the State List, and Entry 7 of the Concurrent List (above). 
  • In interpreting the lists, the Supreme Court in State of Bihar v Kameshwar Singh (1952) invoked the doctrine of colourable legislation, which means you cannot do indirectly what you cannot do directly.
  • Justification by Centre: The Centre, however, argues that trade and commerce in food items is part of the concurrent list, thus giving it constitutional propriety.

Current status 

There is a lock jam type situation. The Supreme court interfered in the matter and suspended the implementation of the laws. 

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