Representational image of a farmer | Photo: Samyak Pandey | ThePrint
Representational image of a farmer | Photo: Samyak Pandey | ThePrint
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New Delhi: The Modi government’s three contentious farmers bills passed by the Lok Sabha this week, have not only outraged the opposition, but also one of the BJP’s oldest allies — Shiromani Akali Dal (SAD).

SAD’s lone minister in the Modi-led NDA government, Harsimrat Kaur Badal quit the cabinet Thursday, calling the bills “anti-farmer”. 

In episode 571 of Cut The Clutter, ThePrint’s Editor-in-Chief Shekhar Gupta declutters the bills, and explains how the opposition to them has exposed the “hypocrisy” of all political parties.

All shades of political hypocrisy

While the Congress might have walked out of the Lok Sabha Thursday in opposition to the farmers’ bills, the party had included much of the same reforms in its 2019 election manifesto. 

Gupta called out Congress’ hypocrisy by citing the party’s manifesto that said, “We will make amendments in the Agriculture Price Marketing Committee (APMC) Act in such a way that all restrictions on the trading of agricultural commodities across countries and across Indian states are removed.”

“In large villages and small towns, we will set up new agricultural markets where farmers will be able to go and sell the produce without any restrictions.”

According to Gupta, this ‘hypocrisy’ cuts across party lines.

While SAD’s Harsimrat might have resigned from the Union cabinet now, her party along with ally BJP in Amritsar in 2001 had set up an agricultural reforms committee, which sought to remove these restrictions on agriculture trade and commodities. 

Interestingly, it was a BJP committee headed by Narendra Modi, who was then the rising star of the party, that gave the report on the reforms committee. 

“Many things have cross-party agreements, but the opposite when they are out of power,” said Gupta.

The BJP’s ‘hypocrisy’ also comes out in the present scenario when the party is in power at the Centre. 

While the BJP might have passed these bills, the government’s export ban on onions also shows this hypocrisy as the bills ask for removal of restrictions on agricultural produce across international borders as well. 

The government has, however, justified the export ban on onions due to the rising prices. Not just now, between 2014 and 2019, export rules on onions have been changed 17 times, while rice export rules have changed 14 times. 

“So what happens to the farmer who has produced these onions and in peak season when it comes to selling the produce, the export rules are changed?” asked Gupta.


Also read: All about the 3 Modi govt ordinances Haryana farmers are protesting against


The three contentious bills

The three bills are the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, and Amendment to 1955 Essential Commodities Act. 

The Essential Commodities Act, 1955, stems from a colonial era law, which regulated how much produce could be stored and sold in India. This same law was inherited in independent India and one of the first amendments to the Indian Constitution, included an amendment to Article 19, which guarantees Freedom of Trade and Commerce. 

The Act was amended as a new entry to the Concurrent List as entry 33, list three, schedule seven, which gives the government much of the same powers. 

This manifested in the license raj in agriculture in the 1960’s when farmers were jailed for keeping produce that exceeded the government’s sanction amount. 

This led to the creation of middlemen, which led to corruption from fork to plate and plate to fork. 

Gupta said that this happened because of “agriculture becoming disintermediated from the market”. 

He said: “In India, agriculture is the only area where markets don’t work. This is because, while India became politically independent in 1947, industry became independent in 1991 with economic liberalisation, but the Indian farmer continues to remain colonised by the politician and the bureaucrat, who control agricultural produce markets.”

The present amendment reduces the power that states and the Centre had to enforce stock limits and price limits on any commodity. So now stock limits and price limits can only be imposed in case of an emergency of war, famine, or a sudden price rise, and there are some price rise limits that have been fixed as well. 

The second bill, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, addresses the marketing issue.

This law says that the Agricultural Produce Market Committee (APMC) will now lose their monopoly over business and territory. It now allows the farmer to take his produce anywhere. Earlier, farmers were required to take their produce only to their APMC mandis even if those are far away from where they are. 

“This allows the farmer to be liberated,” said Gupta. 

He also said that with the farmers not having to pay taxes to the mandi, he can get a better price for their produce and the produce will go directly to the supply chain, which will also help the consumers as they will now have to pay less. 

Gupta said that the opposition in Punjab and Haryana is due to this “arbitrage of taxes going away, which is a major source of revenue for the governments there”. 


Also read: How Congress is justifying its stance against farm bills after backing reforms last year


States not consulted

However, Gupta said that the opposition is correct in pointing out that this has been done during the coronavirus pandemic without consulting the states, which is likely to be challenged in the Supreme Court. 

The third law, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, addresses the farmers’ concern of quantity — how much to produce, and what price the farmer will get for that quantity of produce.

The law fixes a trader, who will allow the farmer to lock in a quantity and a price with the trader before the harvest. 

“It will free the farmers from this vicious cycle of buyers and traders and end users, and it will help them lock in the price before the harvest and it will take away intermediaries and reduce the gap between farm and fork that is the price of that one rupee or two rupees per kilo of potato that the farmer gets and 40 rupees that you and I pay,” said Gupta. 

This, Gupta said, is a big reform that is comparable to the industrial liberalisation in 1991.

Watch the full episode here:

 


Also read: Modi govt can bring real agriculture reforms only by working with states


 

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4 Comments Share Your Views

4 COMMENTS

  1. While at first glance this looks to be a good thing to do, a little reflection makes it clear that only those farmers who have clout (large farmers- just 1% of total farmers) may see better and prosperous days. For all farmers to prosper, govts will have to put in place “success factors”. But first, the challenges the govt should be ready for:

    1. Firstly, india is food grain surplus. So open market operation is likely to result in lower price for produce.
    2. Every time there is a bumper crop, elasticities may come in to play and in fact reduce farmers revenue due to price fall
    3. With more than 86% farmers having less than 1 hectare land, and 13% between 2 to 10 hectares, would, such farmers be in a position to deal with the open market operations? They may still have to use intermediaries ( dalals). Moment they do that, they will be worse off than MSP regime, especially in grain surplus years. If any body thinks that small and marginal farmers (86% of total farmers) can manage without dalals, they just have to look at how much lending gets done by local moneylender despite govts trying hard to put an end to that system.
    4. With free market operations and amendment of essential commodities act, with dalals (possibly same people who hold APMC Licences now) as intermediaries, there is always a possibility of cartelisation, hoarding, withholding.

    So what “success factors” govts need to activate:

    ++ Farmer, to make more money, may start producing such crops where he faces a sellers market (demand more than supply) rather than producing crops where he will be in buyers market . This shift may bring basic food grain shortage , leading to higher prices of staple food for the poor. Govt will have to put in place mechanism to tackle this.
    + + If the govt wants to pursue this, govt should also put in place facilitative and/or regulatory mechanisms to help small and marginal farmers to form producer cooperatives – a la Amul – so that middle men and dalals can be eliminated and these small and marginal farmers cooperatives can directly interact with consumers in real sense. In due course, producer cooperatives can create infrastructure like silos, cold storage chains, refrigerated transport of goods, set up processing units to add value to their produce, set up technical and other units to guide on technology, weather, markets, etc.
    ++ Govt. Could also experiment with forwards market and contract farming with big retailers to bring some degree of assurance and predictability in prices and income. Such contracts could be with cooperatives of small and marginal farmers.
    ++ Like said before, surplus food grains may depress prices. So export may be an option provided govt follows consistent policy. You cant put export curbs at the first sign of local shortage. You need a more mature and intelligent response than the traditional sledge hammer response of BAN.
    ++ Exports may require support as indian costs and productivities are very low. Even Bangladesh has better yields than our. Govt will have to figure out how this can be done.

    Having said the above, this policy, at best , should be looked upon as short to medium term. With 86 % farmers having holding of less than 1 hectare, and 13 % between 2 and 10 hectares, ultimately, india will have to wean out large % of present day farmers from farming and push them into blue and white collar jobs. Given the land holding pattern, keeping farmers in farming is simply unsustainable – you can’t have 50% percent of your population producing just 15% of GDP, and that too at growth rates that are way below the growth rate of other two main sectors of the economy, namely, industry and services. If you keep farmers in farming, they will get poorer in relation to their fellow citizens in service and industry sectors as progressively the share of agri in total GDP goes lower and lower.

  2. Factually incorrect

    1. To say a farmer was not able to sell his products before outside the mandi is wrong, there is already government system eNam and according to yogendra yadav comments 65% of agriculture produce outside the system.

    2. To say MSP will prevail is not a written commitment in the bill and as told by the wire article PDS itself is not legally binding for the govt as told by the attorney general in the open court.

    3. Bihar example is very well there to see how without mandi systems are farmers benefitting for there produce.

    4. Also economic professors from print team article to say there is no constitutional aberration affecting states is misquoted considering agricultural an marketing state subject though trade of products is in concurrent list.

    I always consider print teams articles are well thought over and analyzed but I have to admit the articles from wire provided more facts and correct analysis than yours on this subject.

  3. This bill takes away 6 percent tax revenue of states like Punjab that are border states and have less sources of revenue. The Manmohan Singh Govt’s bill did not reduce the sources of revenue of the state.

  4. Unfortunately the Indian politicians only see politics in everything and the welfare of the country is always secondary. So, attack the government if there is the slightest opportunity. For them it does not matter if the farmer is benefited or not?

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