The controversial Indian farm laws marked a year of their enactment on 17 September 2021. When the bill was passed last year, farmers were not convinced of the laws. Their main concern is that the regulations will eventually eliminate the Centre’s guaranteed Minimum Support Price (MSP) for some crops, making them vulnerable to large corporations.
What is the Minimum Support Price?
The MSP or Minimum Support Price is a minimum price assurance that protects farmers when they sell specific crops. Government agencies purchase certain products at a guaranteed price for farmers, and the MSP cannot be changed under any circumstances. As a result, the MSP concept safeguards farmers throughout the country when crop prices drop.
Punjabi farmers called a three-day rail roko on 24 September 2020 in protest of the new bill. The protests and riots only grew stronger during the next three months. On 25 November 2020, after a series of protests, farmer organizations in Haryana and Punjab issued an appeal for the ‘Delhi Chalo’ movement, formally beginning the unrest.
The farmers faced water cannons and tear gas as police tried to break them during their ‘Delhi Chalo’ march on 26 November in Haryana’s Ambala district.
Later, authorities permitted them to enter Delhi for their silent protest at Nirankari Ground in North-West Delhi, where their indefinite protest began.
Prime Minister Narendra Modi stated in his radio program, Mann ki Baat, on 29 November 2020, that all political parties had made promises to farmers. Still, it was his government that had kept them. He even stated that the MSP system would not be eliminated.
When seven sessions of negotiations between the government and farmer representatives failed to deliver results, the Supreme Court agreed to consider petitions from both parties. It formed a committee to break the dispute. The three problematic laws have been put on stay by the SC.
Finally, on 12 January 2021, farmers sighed with relief when the Supreme Court halted the execution of the disputed laws and established a four-member body to offer legislative recommendations after hearing from all parties.
What are the three controversial laws of the Farm Bill 2020?
1. Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020: This law establishes a national framework for contract farming by requiring a farmer and a buyer to sign a contract before any farm goods are produced or reared.
Provisions of this farm law-
- Farming Agreement: Before producing or rearing any agricultural exports, the Act requires a farmer and a buyer to sign a farming agreement.
- Minimum Period of Farming Agreement: A farming agreement must be in place for at least one crop season or livestock production cycle.
- Maximum Period of Farming Agreement: A five-year farming agreement is the maximum length of time agreed upon.
- Maximum Period of Farming Agreement also states that if the production cycle of any farming product is longer than five years, the farmer and the buyer may collectively agree on the maximum period of the contract, which must be stated clearly in the farming agreement.
- Pricing of Farming Produce: The agreement should include information on the pricing of agricultural products as well as the procedure for determining prices. A fixed price for the product and a clear reference to any additional amount over the specified rate must be included in the agreement for prices that are susceptible to modification.
- Settlement of Dispute: Conciliation Board, Sub-Divisional Magistrate, and Appellate Authority are the three levels of conflict resolution established by the Act.
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2. Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020: The Act allows intra-state and inter-state trade of farmers’ goods outside of Agricultural Produce Market Committee (APMC) markets and other markets notified under state APMC Acts.
Provisions of this farm law-
- Trade of Farmers’ Produce: The Act authorizes farmers to trade outside of farm gates, factory premises, and cold storage facilities, among other places. It could previously only be done in the APMC or Mandis yards.
- Alternative Trading Channels: It promotes barrier-free intra-state and inter-state trade of agriculture produce by facilitating good prices for farmers through alternative trading channels.
- Electronic Trading: It permits the electronic trading of scheduled farmers’ produce (agricultural produce regulated under any state APMC Act) in the designated trade area. It will also make it easier to buy and sell farm produce directly and online using the internet.
- Market Fee Abolished: State governments are forbidden from charging any market tax or cess on farmers, traders, or electronic trading platforms for trading farmers’ produce in an ‘outer trade region,’ according to the Act.
3. Essential Commodities (Amendment) Act, 2020: The Indian Parliament passed in 1955 to assure the delivery of specific commodities or items whose supply, if disrupted due to storing or black-marketing, would harm people’s daily lives. This includes food, medications, and fuel (petroleum goods), among many other things.
1. Powers of the Central Government-
- The Indian government controls the production, supply, and distribution of a variety of goods that it considers “necessary” to ensure that they are available to customers at reasonable costs.
- Any packed product that the government labels an “essential commodity” can have its MRP set by the government.
- When the need arises, the Centre can add items to the list, and if the situation improves, it can remove them.
- If a product is in low supply and prices are rising, the government can impose stock-holding restrictions for a set period.
- Powers of the State Government- The separate state governments have the option of not enforcing any of the restrictions imposed by the Centre. If the limitations are enforced, dealers must sell any equities held over the required quantity into the market immediately. This is done to increase supply and lower prices.
- Amendment- The Government of India will identify specific commodities that are essential to restrict their supply and prices only in circumstances of war, hunger, extreme price spikes, or environmental disasters due to the change to the Act. Cereals, pulses, potatoes, onions, edible oilseeds, and oils are among the commodities that have been deregulated.
- Stock limit- According to the amendment, any stock limit on agricultural goods will be based on price increases and can only be applied if the retail price of horticulture produces rises by 100% and the retail price of non-perishable agricultural food items rises by 50%.
- Calculation- The raise will be based on the price that was in effect for the previous twelve months or the average retail price for the last five years, whichever is less.
Farmers vs. IFI-supported corporate policy:
Parliament enacted the three highly contentious bills without any proper debate or review by parliamentary committees. They did, however, receive support from India’s International Monetary Fund (IMF) executive director Dr. Surjith Bhalla and IMF communications director Gerry Rice, who described them as a potentially “significant step forward for agriculture reforms in India” in a press conference on 14 January.
In January, this was voiced by the IMF’s Chief Economist, Gita Gopinath, who backed the reforms as having the potential to increase farmers’ income.
IFIs and the historical origins of the current reforms:
Previous farm laws laid the groundwork for India’s agricultural reforms. The World Bank advocated for the complete liberalization of the agricultural marketing sector in its 2008 study. The report urged the continuation of reforms begun in the 1990s under the IMF and World Bank’s structural adjustment program (SAP).
Dr. Bhalla considers the current farm legislation to be just as essential as the 1991 changes. They represent the reinstatement of the IFIs’ harmful policy recommendations, pushed through the IMF’s Article IV reports for years.
Despite the government’s assurances that the present Minimum Support Price (MSP) will not be reduced. The IMF’s 2018 Article IV assessment considers the MSP a trade barrier that affects farmers’ decisions, raises inflation, and increases the fiscal burden. MSP will not survive much longer, given the government’s evident willingness to follow the IFIs’ path.
The effects of the agrarian reforms are not confined to the farming sector, as MSP procurement keeps the public distribution system running.
The public distribution system (PDS), which is the backbone of battling hunger and maintaining nutrition and food security in the country. It will be destroyed if the current structure is dissolved. Food insecurity, which the Covid-19 outbreak has worsened, is still an evident problem in India; according to a February article by Indian economist Dipa Sinha, 38% of kids under the age of five are stunted.