The Prime Minister’s recent announcement of the repeal of the three farm laws has brought this issue back into focus. These laws, which were protested by farmers, mostly from Punjab and Haryana, have been a contentious issue for over a year. Let’s delve deeper into understanding these laws, why they were enacted, the reasons behind the protest, and the impacts of repealing them.
Understanding the Three Farm Laws
The three farm laws include the Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, intended to permit agricultural trade outside the existing APMC mandis. The second law, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, provides a framework for contract farming. The third law, Essential Commodities (Amendment) Act, 2020, aims to eliminate items like cereals, pulses, oilseeds, onions, and potatoes from the essential commodities list.
Motivation Behind the Enactment of the Laws
The push for these laws comes from longstanding demands for reforms in agricultural marketing, a matter under the jurisdiction of state governments. Since the early 2000s, the Centre has tried to facilitate these reforms, even proposing a model APMC Act in 2003. However, due to this being a state subject, their success was limited. Therefore, these laws were introduced.
Reasons for Farmers’ Protest
Primarily, the farmers have been demanding the repeal of these new agricultural laws, which they believe favor big corporations and undermine their bargaining power. Their second demand includes the assurance of Minimum Support Price (MSP) to ensure fair crop procurement. Other demands involve the withdrawal of the Electricity (Amendment) Bill and the implementation of MSP as recommended by the Swaminathan Commission.
Supreme Court’s Intervention and Suspension of the Laws
In January 2021, the implementation of these laws was stayed by the Supreme Court. They were enforced for only 221 days, from June 5th 2020 to January 12th 2021. Since then, the laws have been suspended with the government resorting to older provisions of the Essential Commodities Act, 1955 to impose stock limits.
Implications of Repealing the Law
The repeal emphasizes the need for wider consultation in future attempts to reform the rural agricultural economy, not merely for better design but also broader acceptance. The repeal might result in reluctance from the government in pursuing these reforms stealthily again. However, this sector undeniably needs reforms, particularly in marketing outputs as well as inputs, including land lease markets and direct benefit transfer of all input subsidies.
Impact on Farmers’ Income and Industries
Given the average holding size of just 0.9 ha in 2018-19, there is a strong requirement for high-value agriculture via efficient functioning value chains. Without private investments in logistics, storage, processing, e-commerce, and digital technologies, significantly increasing farmers’ income might pose a challenge. The repeal of these laws would also impact industries such as logistics, cold chain, agri-related, and farm equipment which were supposed to benefit directly from these laws.
Trend in Agri-GDP Growth
The agri-GDP growth has remained at 3.5% per annum over the past 14 years. This trend is expected to continue, with minor variations based on rainfall patterns. Cropping patterns will likely remain inclined towards rice and wheat, leading to bloated food subsidies and substantial leakages.
The Way Forward
Despite the challenges, the experience with these farm laws could provide crucial lessons. The key takeaway is that the process of economic reforms must be more consultative, transparent, and well communicated to potential beneficiaries. Considering the democratic functioning and argumentative nature of our society, implementing reforms will require time, patience, and humility to ensure everyone benefits.