The National Democratic Alliance (NDA) led by the majoritarian Bharatiya Janata Party (BJP) government passed three farm Bills during the monsoon session of Parliament. It was heralded as a “watershed” moment in the history of agriculture sector reforms by Prime Minister Narendra Modi.
The three Bills are based on the repealed versions of the ordinances that were introduced in June 2020. The passage of the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act (FPAFSA), 2020, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act (FPTCA), 2020, and the Essential Commodities (Amendment) Act (ECA), 2020, led to protests by farmer associations and organisations.
Politically, these laws, disturbed the relationship of the BJP with their coalition partners and opposition parties. The passage of these Bills needs to be seen as an extension of the BJP’s reforms agenda in the domains of land, labour, capital and technology.
Broadly, two viewpoints are emerging in the ongoing discourse; one, of the liberals arguing in favour of the Acts on the premise that they liberate farmers from the monopoly of Agricultural Produce Market Committee (APMC) and other middlemen in selling their farm produces; provide an enabling ecosystem by promoting barrier-free trade between States and within the State and empower farmers through farming agreement by linking farming to insurance or credit.
On the other side, the main contention is what the Acts have not attended to or mentioned in bringing in the above changes to liberalise the agricultural market. They are: diluting the role of state-regulated APMCs, silence on the fixation of minimum support price (MSP) and the way in which they were passed without adequate debate and discussion in Parliament.
It is necessary to examine these viewpoints to ascertain the role of these legislations in facilitating the agrarian liberalisation, especially market and trade. It is true that now the farmer can have the liberty to sell her/his produce outside the APMCs. No doubt this provision provides freedom to farmers and expands the market choices.
The fact, especially in the context of rural India, is most of the selling of farm produces occurs outside the APMC. This is clearly visible in the case of marginal and small farmers whose operational land holding constitutes 85% in the country as per the Agriculture Census of 2010-11. The high rate of indebtedness among the small and marginal farmers decreases their bargaining power to negotiate the price of the farm produces with the sponsors.
Another factor is the transportation and transaction cost involved in selling the produces from APMCs to the chosen buyer. Given the low average agricultural income, ie, Rs 6,426 per household as estimated by the National Sample Survey Office during 2012-13, it is highly impractical to burden small and marginal farmers with these costs on the pretext of providing an alternative market system.
The FPAFSA fails to take into account these considerations, which are critical in what the Act claims, ie, price assurance and empowerment. The FPTCA has made provisions for the Price Information and Market Intelligence System, both FPAFSA and FPTCA does not ensure price assurance to farmers. The legislation is silent on giving onus to farmers in determining or fixing the price of their produce.
The method for determining the guaranteed price lacks precision and accuracy. The FPAFSA has not touched upon the operationality and feasibility of the rules, especially in creating the alternative organisational units for selling the farming produces other than the APMCs. With the implementation of FPTCA, the State governments lose the revenue arising from the levy or fee that is coming under the APMC or any State law. This clearly violates the spirit of cooperative federalism.
A critical yet unattended area in these Acts has been the role of farming organisations or associations in settling the disputes. By making the Sub-Divisional Magistrate or Collector as the authority to decide and settle the disputes arising out of the farming agreement, the law has cleverly sidelined the collective bargaining power of farmer associations in preserving and protecting farmers’ interests. The same law makes farmer producer organisation (FPO) as a party to the agreement, but not in the case of dispute settlement. A closer look at the provisions indicates that the word “may” has been used more frequently than “shall”, which is necessary to have a binding effect of the law on the parties.
Good intentions are not sufficient for robust legislations. Good intentions need to be supported by necessary political will by creating the required institutional arrangements and infrastructure facilities for the proposed alternative market mechanism for the selling of farm produce. Passing these legislations is only the first step in liberalising farming. It is also necessary to bring in the complementary and required changes in land-related laws, ceiling limits, amendments to the APMCs, and resolve structural issues such as inadequacies of credit/loan system, problems of irrigation, fragmentation of land, technology adoption by farmers and, most importantly, instituting a robust pricing mechanism with the recommendations of the National Commission of Farmers.
The agrarian crisis has deepened since the adoption of the neo-liberal model of governance and development. The recent incidents of farmers’ protests, which sometimes turned violent, signify the acute rural distress and also resulted in unprecedented farmers’ suicides.
This reflects the continued neglect of agriculture by successive governments in the post-Independent period, specifically in the post-economic reform period. The benefits of these farm laws will not accrue to farmers in the absence of course correction steps to address the above-mentioned structural issues. The government must tread the path cautiously in implementing these laws or else it will sow the seeds for the agrarian insurrection in the countryside as witnessed in Tebhaga, Telangana and Naxalbari regions.
(The author is Doctoral Fellow, Centre for Political Institutions, Governance and Development, Institute for Social and Economic Change, Bengaluru)
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