The sudden TV appearance of the Prime Minister Narendra Modi at 9Am on last Friday, the 19th November to inform the nation that the Government has decided to repeal the three Farm Reforms laws -Farmers Produce ,Trade and Commerce (Promotion and Facilitation) Act, Farmers (Empowerment and Protection) Agreement on Price Assurance, Farm Services and Essential Commodities (Amendment ) Act took every one by surprise. These “Reform” laws were pushed through first as an ordinance on the stated reason that implementation of the reforms was so very urgent in the public interest and as it was not possible” to have a Parliamentary enactment on the subject” as the Parliament was not in session, promulgation of an Ordinance under the article 123 by the President was considered necessary . The President thus acted on the advice of the cabinet and promulgated the Ordinance .
Under the Constitution every ordinance must be laid before the Parliament when it reassembles and “shall automatically cease to have effect at the expiration of 6 weeks from the date of reassembly unless disapproved by the Parliament.” This constitutional requirement resulted in a situation when the Parliament passed the laws in September 2020 brushing aside the opposition demand for a detailed scrutiny by the concerned Parliamentary Standing Committee and consultation with the states as Agriculture is a State subject. This was done because the Government was convinced of the urgent need to implement the Farm Reforms laws.
The opposition’s point wasn’t without basis as Agriculture is a subject under List 2 (Entry no 14 )detailing subjects under the State , and Land and matters connected with land are also in the state list under Entry no.18. Under Entry no 33 of the Concurrent List detailing subjects over which both the Centre and the states enjoy ‘ concurrent’ jurisdiction and responsibilities, “Trade and Commerce in and the production, supply and distribution of food stuffs including edible oilseeds and oil and other agricultural produce such as raw cotton , cotton seeds, raw jute, cattle fodder including oil cakes are included in this list. However in the true spirit of our quasi federal system and even with its provisions allowing Union Governments’ exercise of overriding power, all matters in the concurrent list demand coordinated action by both the union and the state governments for effective implementation of the policies and laws made in regard to these subjects. Evidently this was not done in adequate measure in regard to formulation of policies which formed the basis of the Farm Reforms laws. The decision to repeal the laws now bears testimony of the fact that ” due diligence” in the sense it is understood in all mature democracies wasn’t done by concerned Ministries of the Government in framing the policies and the laws based thereon. The three Ordinances were promulgated on 7 June 2020 just after the total lock down was lifted.
This becomes apparent if one examines the basis of” Farm Reforms” the government sought to introduce which is indeed a” Neo liberal” package designed to allow private trade and industry unfettered access to markets of agricultural produce by phased withdrawal of the government agencies- Central and the states presently involved in a lead role in the marketing, storage, processing and sale of food crops to the consumers through the mechanisms of Public Distribution system backed up by laws such as Food Security Act. This will leave only agricultural research, extension, that is transfer of technology, plant protection, seed production and distribution to the state , and warrants withdrawal of the Minimum Support Price (MSP)as determined by the Central Government appointed Committee on the periodic estimates of cost of production of crops and guaranteed procurement of surplus Rice and wheat at the MSP announced/ notified by the government agencies like the Food Corporation of India and its state partners regardless of the domestic demand for grains, and gradual dismantling of the infrastructure developed over a long time by the state and central agencies like the Agricultural produce Marketing Committees (APMC) and the agricultural marketing Cooperatives founded on FCI procurement to facilitate direct interaction between farmers and the private trade. It is presumed that this will provide higher market driven price to the farmers and also attract corporate investment and promote contract farming. About 45% of the population is engaged in agriculture which accounts for 17% of GDP.
All these developments, it is envisaged will enable the farmers to get better market determined prices for the agricultural produce than what they receive now under the present MSP/ FCI procurement driven system for food crops. Withdrawal of restrictions on storage of food grains as under the present Essential Commodities Act will encourage the traders to procure more which will help towards building greater storage capacity which is good for the farm sector.
This tantalizing vision of farmers prosperity caused by the free market and operation of the market forces makes little sense if one looks at the situation the growers of all food crops other than Rice and wheat , horticultural crops, vegetables and cash crops like sugar cane and cotton face in what is essentially a buyer’s market, that is, where a few buyers – infinitely stronger dictate the prices to numerous unorganised growers/sellers . It is only tempered in areas where MSP/FCI procurement system is functioning as in Punjab Haryana West UP in respect of Rice and wheat and in some other parts as well where the farmers are assured of procurement of surplus Rice and wheat at the minimum support price. So the message is clear: Remove it and you are back to colonial period when periodic famine ravaged the country as the colonial government left grain trade entirely to the private trade and market forces. If one looks at the plight of growers of other food, horticultural , vegetable and cash crops like cotton, jute, sugar cane it becomes clear that market forces don’t help the growers to get the remunerative price; but only raise the control of the trade and industry over price the farmers could hope for,as for example, the way the Sugar Mills decide to procure cane for crushing cause cane prices to fall or how the hoarders of grains, edible oil and perishable crops control the market price.
Since market for agricultural produce will always remain a buyer’s market, the farmers will remain weak and the buyers much stronger unless they are organised into co-operatives and backed up by state policies and institutions like the MSP/ FCI procurement system. In fact there is a strong case for extending the state procurement to sugarcane and perishable crops like onions and tomatoes to prevent sharp rise of vegetable prices. The international experience from the 2007-8 Great recession which is still continuing and in the current COVID crisis suggest a dynamic State intervention and not withdrawal from the economy and especially the rural economy. It is time the government addressed the unabated high incidence of farmers suicides across the country especially in drought prone areas and the constraints on raising crop yields and incomes of small farm holdings rather than reposing faith in market led growth model for the rural economy which is unlikely to be of any help to the farming community in raising their incomes and securing their livelihoods.
It is also time to remember what Bharat Ratna Nanaji Deshmukh reminded the nation to note that the farmers are “the custodians of the natural resources and provide raw materials for value addition ; and therefore, contribution of the rural people is not to be seen in terms of the share of agriculture and allied sectors in the GDP but as guardians of all ” life support systems”. From this broad perspective, the decision to repeal the Farm Reforms laws is a positive measure of the Modi government.