Farm Laws Repeal

AGRICULTURE/ ECONOMY/ GOVERNANCE

• GS-3: Agriculture & issues.
• GS-2: Issues and challenges pertaining to the federal structure 
• GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Farm Laws Repeal

Context: Government announced the repeal of three contentious farm laws, assuring farmer groups protesting against them for the past year that the legislative process for the repeal would be completed in the upcoming Winter Session of Parliament.

What was logic behind enacting new farms laws?

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

• Moving beyond APMC mandis: It was argued that if India needs to diversify its cropping pattern into export-oriented and high-value crops, mandis need to give way to private markets, futures markets and contract farming. 
• Incentivising Private entry: The APMC Acts discriminated against farmers by not allowing them to interact directly with the big corporate buyers and exporters. So, the APMC Acts must be amended so that any private market or rural collection centre can freely emerge anywhere without approval of the local mandi or the payment of a mandi tax, and so that contract farming can be popularised. 
• Improving Storage infrastructure: Similarly, the advocacy for the amendment to the Essential Commodities Act, 1955 rested on the view that private corporate investment can be incentivised into storage and warehousing if stock limits are relaxed for traders.
• Marketing Freedom to Farmers: The Centre’s farm laws were an attempt to ensure that farmers get the right price for produce, and have the freedom to sell where they want to. 

Is privatisation the panacea for agricultural sector?

Entry of Private players into agriculture sector has its own set of problems.

• Bihar’s example showed that private investment was unlikely to flow into agricultural markets even if APMC Acts were annulled. In fact, the exploitation of farmers by unscrupulous traders intensified in Bihar after 2006. 
• Maharashtra delisted fruits and vegetables from the ambit of APMCs in 2016. Still, the inflow of private investment into agricultural markets was only marginal. 
• Possibility of Fragmentation of market: Thus, what was likely was that a formal and regulated market (through APMC) might fragment itself into an informal and unregulated market if the APMC Acts were weakened.

What were the  major sore points with new farm laws?

• Fear of Corporate Capture: There fears that the producers and consumers would be adversely affected, to the benefit of big companies. 
• Impact on Rural Infrastructure: Mandi taxes were used to invest in rural infrastructure in States such as Punjab. If mandis are weakened, there are uncertainty on the substitute for such investments that further impact rural infrastructure development.
• Structural Problems will remain unaddressed: Even if private markets emerged, the structural problem of poor farm-gate aggregation of the produce of small and marginal farmers will remain unaddressed. There is criticism that one middleman will be simply substituted by another.
• Criticism of Grievance Redress Mechanisms: Eradicating the power of civil courts and their substitution with a weak mechanism led by the sub-divisional magistrate threatened to be a serious impediment to a just redress of complaints. It was feared that this may benefit corporate sponsors more than the contracting farmers.
• Undemocratic manner of passing laws: 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.
• Mishandling of Farmer protests: Efforts were made to break, divide, buy out, demean, denigrate, demonise and shame the protesters, who were conveniently branded as terrorists and Khalistanis. 
• Violation of Federal principles: The Union government invoked Entry 33 of the Concurrent List to intervene into matters in Entry 14, Entry 26 and Entry 27 of the State List. Thus, to begin with, the farm laws were reasonably and justifiably argued to be unconstitutional.
• Criticism on the Direction of Farm reforms: 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)

What is the implication of withdrawal of Farm Laws?

• Democratic Victory: Marks a historic victory for the farmer’s movement in India. For more than a year, thousands of farmers had barricaded Delhi, and their protests were gradually evolving into a pan-Indian movement of resistance. Repealing of farm laws has helped put an end to the protests.
• End of Confrontation: The repeal of the farm laws has, at least temporarily, put an end to confrontation between the Union government and the farmers. 
• Positive Politicisation: The agitation has led to a positive politicisation of several agrarian demands, including the need for stable markets and remunerative prices.
• Set a precedence: A confidence has grown that committed struggles matter and even aggressive governments can be made to kneel. New rural mobilisations around demands to address the larger and persistent agrarian crisis are likely to emerge and grow.
• Trust is important for legitimacy of laws: Government has done well to acknowledge that laws are not as good as their enforcement by state machinery, but only as good as their capacity to win people’s trust

Connecting the dots:

• The perils of deregulated imperfect agrimarkets
• How has agri-marketing policy changed over years
• MSP Demand and Possible solution
• New Farm Acts and Opposition to it
• Basis for MSP
• MSP in the age of Surplus