Agri Reform- What's the truth?

The two controversial farm Bills that have divided the polity and led NDA partner SAD to quit the Narendra Modi government were passed by a voice vote in the Rajya Sabha on Sunday amid a major ruckus by the Opposition members who trooped into the Well of the House, shouted slogans, tore the rule book and damaged the presiding officer’s mike to register their protest.

 

This was the first instance of a protest in the Well of the House in the monsoon session that is being held in the midst of the Covid pandemic where social distancing norms have been enforced. Prime Minister Narendra Modi has been reiterating his resolve to double the farmers’ income by 2022 and this was one of the many steps in that direction. Therefore, it is no surprise that the Prime Minister described this moment as a “watershed moment” in the history of Indian agriculture asserting that the passage of the bills will ensure complete transformation of the agriculture sector and empower crores of farmers. The Parliament passed two bills related to farmers and the sale of farm produce granting liberty to farmers to sell their products outside their respective states and mandis without losing the minimum support price (MSP) protection.

 

But, there's a point that has irked farmers the most. The fear is that once the prevailing hegemony of the APMC collapses, private commission agents will dictate price. Farmers and farmer leaders fear that once private markets are set up outside the APMCs, the APMC will have few buyers. This is because a key feature of the new legislation is that in the ‘trade areas’, the new markets– no market fee, cess or levy shall be charged to the farmer or the trader.

 

Under the old system, these charges could add up to a significant proportion of the transactions– as high as 8.5% in Punjab. So, the new legislation tilts the balance in favour of the private markets set up by traders. It is not a level playing field. Ultimately, no one will go to the APMC if there are no taxes outside APMC. The traders will find it cheaper to buy outside. They might even pay farmers a proportion of their gains to lure them outside the APMCs and in two three years’ time the APMC structure will collapse.

 

So, one of the fears is that the new legislation paves the way for dismantling the APMC structure. Once that happens, the fear is that the ‘open markets’ will operate as oligopolies where a bunch of traders come together to set a price no trader goes above. The argument in favour of allowing private markets to flourish is that this will eventually benefit the farmers as it will mean that ‘free trade’ will take place and the market will move closer to the utopian perfect competition thus ensuring that the farmer gets a just price for her crop.

 

That argument seems quite tenuous if one looks at how the only state, Bihar, which has repealed the APMC act has performed. The state revoked the APMC act in 2006 citing the above made argument. It has led to the virtual dismantling of the APMC structure in the state, with close to zero government procurement of crops that fall under the minimum support price regime (MSP).

 

Further, the passage of the farm Bills in the Rajya Sabha by a voice vote, and the request of the opposition to the deputy chairman to put the Bills to voting, and the failure of the deputy chairman to do so clearly prove that the procedure for passage of the Bills have been violated. Such procedural lapse is subversion of democracy. The need of the hour is to restore the culture of deliberative and consultative process of lawmaking and salvage the democratic process in parliament– the apex representative body in the constitutional scheme of governance.