[Editorial Analysis] The defeat of hubris, a confrontation on hold

Mains Paper 3: Economy
Prelims level: Agricultural Produce Market Committee
Mains level: Agriculture


• The repeal of the three farm laws by the Union government, on Friday, 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.

• Government’s Response so far: Its focus was on controlling and positivising the narrative. Often farmers were conveniently branded as terrorists and Khalistanis and sedition cases were filed against the protesters.

The broader context:

• “Reforms” in agriculture: advocated by economists after 1991, were focused on dismantling the institutional support structures in Indian agriculture that were established after the 1960s.

• These support structures include — in prices, subsidies, credit, marketing, research and extension — were instrumental in India’s achievement of food self-sufficiency between the 1960s and the 1980s.

Reforms In agricultural marketing:

• Reforming Mandis governed by the Agricultural Produce Market Committee (APMC) Acts passed by State Assemblies. It is 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.

• Problems of the APMC Acts: It discriminates against farmers by not allowing them to interact directly with the big corporate buyers and exporters.

• Solution advocated: 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.

Advocacy for the amendment to the Essential Commodities Act, 1955:

• Conventional wisdom: private corporate investment can be incentivised into storage and warehousing if stock limits are relaxed for traders.

• Problem in this amendment: It was a long-held constitutional consensus in India that agricultural marketing was the legislative arena of State governments.
• Efforts taken in this regard:

• In 2003: the Union government prepared a Model Act on agricultural marketing and sent it to States for passage in State Assemblies.

• Circulation of two other Model Acts, in 2017 and 2018: Many States selected a few clauses, which they found attractive and suitable to their contexts, and accordingly amended their APMC Acts between 2003 and 2020. Only one State — Bihar — used the occasion to completely annul its APMC Act in 2006.

Farmers Laws recently withdrawn were unconstitutional:

• In 2020, Union government took up on itself the task of legislating on agricultural marketing and passed the farm laws.

• Federal principles were violated as the
1. Union government invoked Entry 33 of the Concurrent List – Trade and commerce in, and the production, supply and distribution of certain goods including foodstuffs, including edible oilseeds and oils; cattle fodder, including oilcakes and other concentrates; raw cotton, whether ginned or unginned, and cotton seed; and raw jute.
2. It intervened into matters in Entry 14(Agriculture), Entry 26(Trade and commerce) and Entry 27(Production, supply and distribution of all other good) of the State List.
3. The farm laws even interfered with Entry 28 of the State List(Markets and fairs), which were not subject to Entry 33 of the Concurrent List.

• They were reasonably and justifiably argued to be unconstitutional. However, the Supreme Court of India refused to act swiftly on petitions filed before it. Instead, without consulting the protesting farmer’s organisations, it appointed, in January 2021, a committee of four persons, all of whom had publicly declared their support for the farm laws. Farmer’s organisations, on their part, distanced themselves from the committee and continued with their agitation.

Problem of the Content of the acts – weakening of the formal market:

• Existing free markets: 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. Kerala never had an APMC Act.

• Problems Even in developed states: Maharashtra delisted fruits and vegetables from the ambit of APMCs in 2016. Still, the inflow of private investment into agricultural markets was only marginal.

• Importance of Mandi taxes: These were used to invest in rural infrastructure in States such as Punjab.

• Problem of Structural problem of poor farm-gate aggregation of the produce of small and marginal farmers would still remain. New types of middleman would emerge.

• Poor grievance redress mechanisms for contract farming act: The obliteration of 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.

• It pointed towards corporates: 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).

• In Essential Commodities Act: there was reasonable suspicion that a handful of corporate players were to substantially benefit from investments in logistics, storage and warehousing.


Prelims Questions:

Q.1) With reference to the Investor Education and Protection Fund Authority, consider the following statements:

1. It has been established under Section 125 of the Companies Act 2013 for administration of the IEPF fund as per section 125 (3) of Companies Act 2013.

2. It works under the administrative control of Ministry of Finance.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: A

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