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Policy

Comparison of the 2020 central farm laws with the amendments proposed by states

Prachi Kaur , Suyash Tiwari - December 7, 2020

A few weeks ago, in response to the initial protests by farmers against the new central farm laws, three state assemblies – Chhattisgarh, Punjab, and Rajasthan – passed Bills to address farmers’ concerns.  While these Bills await the respective Governors’ assent, protests against the central farm laws have gained momentum.  In this blog, we discuss the key amendments proposed by these states in response to the central farm laws.

What are the central farm laws and what do they seek to do?

In September 2020, Parliament enacted three laws: (i) the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, (ii) the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and (iii) the Essential Commodities (Amendment) Act, 2020.  The laws collectively seek to: (i) facilitate barrier-free trade of farmers’ produce outside the markets notified under the various state Agriculture Produce Marketing Committee (APMC) laws, (ii) define a framework for contract farming, and (iii) regulate the supply of certain food items, including cereals, pulses, potatoes, and onions, only under extraordinary circumstances such as war, famine, and extraordinary price rise.

How do the central farm laws change the agricultural regulatory framework?

Agricultural marketing in most states is regulated by the Agricultural Produce Marketing Committees (APMCs), set up under the state APMC Act.  The central farm laws seek to facilitate multiple channels of marketing outside the existing APMC markets.  Many of these existing markets face issues such as limited number of buyers restricting the entry of new players and undue deductions in the form of commission charges and market fees.  The central laws introduced a liberalised agricultural marketing system with the aim of increasing the availability of buyers for farmers’ produce.  More buyers would lead to competition in the agriculture market resulting in better prices for farmers.  

Why have states proposed amendments to the central farm laws?

The central farm laws allow anyone with a PAN card to buy farmers’ produce in the ‘trade area’ outside the markets notified or run by the APMCs.  Buyers do not need to get a license from the state government or APMC, or pay any tax to them for such purchase in the ‘trade area’.  These changes in regulations raised concerns regarding the kind of protections available to farmers in the ‘trade area’ outside APMC markets, particularly in terms of the price discovery and payment.  To address such concerns, the states of Chhattisgarh, Punjab, and Rajasthan, in varying forms, proposed amendments to the existing agricultural marketing laws.

The Punjab and Rajasthan assemblies passed Bills to amend the central Acts, in their application to these states.  The Chhattisgarh Assembly passed a Bill to amend its APMC Act in response to the central Acts.  These state Bills aim to prevent exploitation of farmers and ensure an optimum guarantee of fair market price for the agriculture produce.  Among other things, these state Bills enable state governments to levy market fee outside the physical premises of the state APMC markets, mandate MSP for certain types of agricultural trade, and enable state governments to regulate the production, supply, and distribution of essential commodities and impose stock limits under extraordinary circumstances.

Chhattisgarh

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 allows anyone with a PAN card to buy farmers’ produce in the trade area outside the markets notified or run by the APMCs.  Buyers do not need to get a license from the state government or APMC, or pay any tax to them for such purchase in the trade area.  The Chhattisgarh Assembly passed a Bill to amend its APMC Act to allow the state government to notify structures outside APMC markets, such as godowns, cold storages, and e-trading platforms, as deemed markets.  This implies that such deemed markets will be under the jurisdiction of the APMCs as per the central Act.  Thus, APMCs in Chhattisgarh can levy market fee on sale of farmers’ produce in such deemed markets (outside the APMC markets) and require the buyer to have a license.

Punjab and Rajasthan

The Punjab and Rajasthan Bills empower the respective state governments to levy a market fee (on private traders, and electronic trading platforms) for trade outside the state APMC markets.  Further, they mandate that in certain cases, agricultural produce should not be sold or purchased at a price below the Minimum Support Price (MSP).  For instance, in Punjab sale and purchase of wheat and paddy should not be below MSP.  The Bills also provide that they will override any other law currently in force.  Table 1 gives a comparison of the amendments proposed by states with the related provisions of the central farm laws. 

Table 1: Comparison of the central farm laws with amendments proposed by Punjab and Rajasthan

Provision

Central laws

State amendments

Market fee

  • The central Acts prohibit the state governments and APMCs from levying any market fee, cess, or any other charge on the trade of farmers’ produce outside the market yards notified or run by APMCs.
  • The state Bills empower the state government to levy a fee (on private traders and electronic trading platforms) for trade outside the markets established or notified under the respective state APMC Acts.  Such fees collected will be utilised for the welfare of small and marginal farmers in case of Punjab, and for running of the APMCs and welfare of farmers in case of Rajasthan.

Minimum Support Price (MSP) - fixed by the central government, based on the recommendations of the Commission for Agricultural Costs and Prices
  • The central Acts do not provide for the MSP.  They do provide for a contractual agreement for buyers and farmers to enter into prior to the production or rearing of any farm produce.  This agreement must specify a minimum guaranteed price that the buyer will pay to the farmer for the sale.  
  • The Punjab Bill provides that sale or purchase of wheat or paddy in state should be at prices equal to or above the MSP.
  • The Rajasthan Bill provides that the pre-determined prices for all crop under farming agreements should be at prices equal to or above the MSP.  

Penalties for compeling farmers to sell below MSP
  • Not prescribed.
  • In Punjab, if any buyer compels a farmer to sell wheat or paddy at a price below MSP, he will be penalised with an imprisonment term of at least three years and a fine.  
  • In Rajsthan, if a buyer compels a farmer to enter into a farming agreement below MSP, it will attract imprisonment between three and seven years, or a fine up to five lakh rupees, or both.

Delivery under farming agreements

  • The central Acts provide that the delivery of the produce can be: (i) taken by buyers at farm gate within the agreed time, or (ii) made by the farmer, in which case the buyer will be responsible for preparations for timely acceptance of the delivery. The buyer may inspect the quality of the produce as defined in the agreement.
  • In Rajasthan, if a buyer refuses to accept agricultural produce or take delivery of goods within a week from date of intimation by the farmer, he will attract imprisonment between three and seven years, or a fine of up to five lakh rupees, or both. 

Regulation of essential commodities
  • The Essential Commodities Act, 1955 empowers the central government to regulate the production, supply, distribution, storage, and trade of essential commodities, such as medicines, fertilisers, and foodstuff.  The Essential Commodities (Amendment) Act, 2020 empowers the central government to regulate the supply of certain food items, including cereals, pulses, potato, and onions, only under extraordinary circumstances such as war, famine, extraordinary price rise, and natural calamity of grave nature.  
  • The state Bills provide that the respective state government will also have the powers to: (i) regulate the production, supply, and distribution of essential commodities, and (ii) impose stock limits under extraordinary circumstances.  Such circumstances may include: (i) famine, (ii) price rise, (iii) natural calamity, or (iv) any other situation.

Imposition of stock limit

  • The Rajasthan Bill amending the central Act empowers the state government to impose stock limits, under certain conditions, on any farm produce sold under a farming agreement.  These conditions are: (i) if there is a shortage of such farm produce in the state, or (ii) if there is a 25% increase in prices of such produce beyond the maximum price which was prevailing in the market (within two years before passing of such an order by the state government).

Dispute Resolution Mechanism for Farmers
  • The central Acts provide that at first, all disputes must be referred to a Conciliation Board for resolution.  If the dispute remains unresolved by the Board after 30 days, the Sub-Divisional Magistrate (SDM) may be approached for resolution. 
  • Further, parties can appeal to an Appellate Authority (presided by collector or additional collector) against decisions of the SDM.  Both SDM and Appellate Authority will be required to dispose a dispute within 30 days from the receipt of application.
  • Instead of the dispute resolution mechanism specified under the central Acts, the Rajasthan Bill provides that disputes will be resolved by APMCs, as per the provisions of the state APMC Act.  

Power of civil courts
  • The central Acts prohibit civil courts from adjudicating over disputes under the Acts. 
  • The Punjab Bill allows farmers to approach civil courts or avail other remedies under existing laws, in addition to those available under the central Acts.
  • The Rajasthan Bill provides that the jurisdiction of civil courts over disputes will be as per the state APMC Act and rules under it.  Currently, the state APMC Act prohibits civil courts from adjudicating over disputes related to trade allowance and contract farming agreements under the Act.

Special provisions

  • -
  • The Bills provide that the state APMC Act will continue to apply in the respective states, as they did prior to enactment of the central Acts (i.e. June 4, 2020).  Further, all notices issued by the central government or any authority under the central Acts will be suspended.  No punitive action will be taken for any violation of the provisions of the central Acts. 

Note: A market committee provides facilities for and regulates the marketing of agricultural produce in a designated market area. 

Have the state amendments come into force?

The amendments proposed by states aim to address the concerns of farmers, but to a varying extent.  The Bills have not come into force yet as they await the Governors’ assent.   In addition, the Punjab and Rajasthan Bills also need the assent of the President, as they are inconsistent with the central Acts and seek to amend them.  Meanwhile, amidst the ongoing protests, many farmers’ organisations are in talks with the central government to seek redressal of their grievances and appropriate changes in the central farm laws.  It remains to be seen to what extent will such changes address the concerns of farmers.

 

A version of this article first appeared on Firstpost on December 5, 2020.

Parliament

President’s Address 2014 to 2017: Plan vs. Performance

Roopal Suhag - February 6, 2017

Budget Session 2017 commenced with the President, Pranab Mukherjee, addressing a joint sitting of Parliament on January 31, 2017.  This address by the President highlights the legislative and policy activities and achievements of the government in the previous year.  In addition, it gives a broad indication of the government’s agenda for the year ahead.  The address is followed by a motion of thanks that is moved in each House by ruling party MPs.  This is followed by a discussion on the address and concludes with the Prime Minister replying to the points raised during the discussion.

In the lower house, the motion of thanks has begun today.  It began in the upper house on February 2, 2017.  Lok Sabha and Rajya Sabha have allocated two and three days for the discussion, respectively.  In this context, we present an analysis of the salient points of the agenda proposed in the President’s address from 2014 to 2017 and the current status of its implementation.

Policy priority stated in the President’s address (2014 to 2017) Current Status 
Macroeconomy
  • GDP growth has made India the world’s fastest growing economies, among large economies.
  • Foreign exchange reserves have been at an all-time high, and inflation, current account deficit and fiscal deficit have consistently reduced since 2014.
  • The GDP is estimated to grow at 7.1% in 2016-17, compared to its growth of 7.9% in 2015-16.[i]
  • The Economic Survey 2016-17 has stated the GDP growth to be between 6.75% and 7.5% in 2017-18.[ii]
  • The average CPI inflation declined from 5.6% in December 2015 to 3.4% in December 2016.[iii]  In the same period, food inflation also decreased from 6.4% from 1.4%.3
  • Current account deficit decreased from USD 14.7 billion in 2015-16 (April-September) to USD 3.7 billion in the corresponding period in 2016-17.[iv]
  • Foreign exchange reserves presently stand at Rs 24,54,950 crore, an increase of Rs 1,02,130 crore from 2016.[v]
Poverty eradication and financial inclusion
  • The Pradhan Mantri Jan Dhan Yojana was launched to provide universal access to banking facilities.  The coverage under the scheme is close to 100%.
  • The proposed Postal Payment Bank of India will further boost financial inclusion.
  • Presently, around 27 crore accounts have been opened under the scheme.[vi]  However, out of these, 25% of the accounts are zero balance accounts.6
  • The Indian Postal Payments Bank has started.[vii]  The postal network with over 1.5 lakh post offices will also function as postal banks.7
Agriculture and water security
  • Pradhan Mantri Fasal Bima Yojana has expanded risk-coverage, doubled the sum insured, and facilitated low premium for farmers.
  • The government is also committed to implementation of Interlinking of Rivers Project.
  • Pradhan Mantri Fasal Bima Yojana has been implemented by 21 states.[viii]  3.66 crore farmers have been covered under the scheme, out of a total of 11 crore farmers in the country.[ix]
  • In April 2015, a Task Force was constituted on the Interlinking of Rivers Project.[x]  The Task Force is yet to submit its report.  The sub-Committee on restructuring the National Water Development Agency in September 2015 had recommended that a National Interlinking of Rivers Authority should be created through an Act of Parliament.[xi]  So far, further steps have not been taken in this regard.
Energy
  • The Electricity (Amendment) Bill, 2014 has been introduced to bring reforms in the electricity sector.
  • Renewable energy capacity will manifold to 175 GW by 2022.
  • The Electricity (Amendment) Bill, 2014 is pending in the Parliament.  The Standing Committee submitted its report on the Bill in May, 2015.[xii]
  • As of December 2016, 51 GW of renewable energy has been generated in the country.[xiii]  However, in 2016-17, only 26% of the target of the generation of renewable energy could be achieved.13
Governance and legal reforms
  • Close to 1,800 obsolete legislation are at various stages of repeal.
  • My government is committed to providing 33% reservation to women in the Parliament and state Legislative Assemblies.
  • Amendments to the Prevention of Corruption Act are also on the anvil.
  • 758 Appropriation Acts and 295 laws have been repealed.[xiv],[xv]
  • No Bill in relation to providing 33% reservation to women has been introduced yet.
  • The Prevention of Corruption (Amendment) Bill, 2013, is presently pending in Parliament.  The Standing Committee and Rajya Sabha Select Committee have submitted their reports on the Bill.
Defence
  • One Rank One Pension scheme will be implemented.
  • Defence procurement procedure has been streamlined with a focus on indigenously designed, developed and manufactured weapon systems.
  • Recognising the importance of coastal security, the government will set up a National Maritime Authority.
  • The government will also build a National War Memorial to honour the gallantry of our soldiers.
  • The implementation of One Rank One Pension scheme has been initiated.[xvi]  In 2016-17, Rs 12, 456 crore was allocated to the scheme.[xvii]
  • The Defence Procurement Policy 2016 added an additional category “Buy (Indian-Indigenously Designed, Developed and Manufactured) as the most preferred way of capital acquisition.[xviii]
  • The National Maritime Authority and National War Memorial are yet to be established.
Environment
  • Funds will be released to states and union territories for aggressive afforestation.
  • To conserve the Himalayan ecology, a National Mission on Himalayas will be launched.
  • Target for emission standards for motor vehicles has been drastically brought forward to achieve Bharat Stage –VI norm by 2021.
  • Parliament passed the Compensatory Afforestation Fund Bill, 2015 in July 2016.[xix]  The Bill establishes the National Compensatory Afforestation Fund and a State Compensatory Afforestation Fund for each state.  These Funds will be primarily spent on afforestation.
  • The National Mission on Himalayas is yet to be launched.
  • To make Bharat Stage-VI norms applicable by April 1, 2020, a draft notification was released in February 2016.[xx]
Rural and Urban Development
  • To develop 300 rural growth clusters across the country, Shyama Prasad Mukherji Rurban Mission has also been launched.
  • Mission Antyodaya, an intensive participatory planning exercise has been initiated.
  • Annual action plan for 500 cities with an outlay of Rs 50,000 crore has been approved.
  • To implement the Rurban mission, Rs 5,142 crore has been allocated for the period from 2015-16 to 2019-20.[xxi]
  • Under Mission Antyodaya, the release of funds has been lower than the allocated amount in the last three years, from 2014-15 to 2016-17.[xxii]
  • Under the Smart Cities Mission, Rs 4,572 has been released to 98 cities during the years 2015-16 and 2016-17.[xxiii]
Health
  • My government will formulate a New Health Policy and roll out a National Health Assurance Mission.

 

  • Pradhan Mantri Bharatiya Jan Aushadi Pariyojana has been launched to ensure that the poor have access to quality medicines at affordable prices.
  • A group was constituted in July 2014 to prepare a comprehensive background paper for the roll out of the National Health Assurance Mission.[xxiv]  Further progress in this regard has not been made.
  • The draft National Health Policy was released in December 2014 for public comments and suggestions.[xxv]  The Policy has not been finalised yet.
  • Under the Pradhan Mantri Bharatiya Jan Aushadi Pariyojana, Pradhan Mantri Bhartiya Janaushadhi Kendras are proposed to be opened in all 630 districts of the country.[xxvi]
Women and child development
  • A Bill to amend the Juvenile Justice Act has been introduced in Parliament to reform the law relating to juvenile offences.
  • The Juvenile Justice (Care and Protection of Children) Bill, 2014 was passed by Parliament in December 2015.[xxvii]  The Bill permits juveniles between the ages of 16-18 years to be tried as adults for heinous offences.


[Sources: President’s Address to the Parliament from 2014 to 2017; PRS.]

For important highlights from the President’s address in 2017, please see here.  For an analysis of the status of implementation of the announcements made in the 2016 address, please see here.


[i] “Press note on First Revised Estimates of National Income, 2015-16”, Ministry of Statistics and Programme Implementation, January 31, 2017, http://mospi.nic.in/sites/default/files/press_release/nad_PR_31jan17.pdf.

[ii] Economic Survey, 2016-17, http://finmin.nic.in/indiabudget2017-2018/e_survey.asp.

[iii] “Press Release Consumer Price Index Numbers on Base 2012=100 for Rural, Urban and Combined for the Month of December 2016”, Ministry of Statistics and Programme Implementation, January 12, 2017,http://mospi.nic.in/sites/default/files/press_release/CPI_PR12jan17th.pdf

[iv] “Developments in India’s Balance of Payments during the second quarter of 2016-17”, Reserve Bank of India, December 13, 2016, https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=38884.

[v] “Developments in India’s Balance of Payments during the second quarter of 2016-17”, Reserve Bank of India, December 13, 2016, https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=38884.

[vi] Progress Report, Pradhan Mantri Jan Dhan Yojana (Last accessed on January 24, 2017),http://www.pmjdy.gov.in/account.

[vii] “Cabinet approves setting up of India Post Payments Bank”, Cabinet, June 1, 2016.

[viii] “Achievements of Ministry of Agriculture and Farmers Welfare”, Ministry of Agriculture, January 2, 2016.

[ix]  “Agricultural Statistics at a Glance 2015”, Department of Agriculture, Cooperation and Farmer’s Welfare, Ministry of Agriculture and Farmer’s Welfare, http://eands.dacnet.nic.in/PDF/Agricultural_Statistics_At_Glance-2015.pdf.

[x] “Task Force on Interlinking Rivers Constituted”, Press Information Bureau, Ministry of Water Resources, April 14, 2015.

[xi] Special Committee for Interlinking of Rivers, National Water Development Agency,http://www.nwda.gov.in/writereaddata/ilr/notification.pdf.

[xii] Report No. 4, Standing Committee on Energy, ‘The Electricity (Amendment) Bill, 2014’, Lok Sabha, May 2015, Standing Committee on Energy, http://www.prsindia.org/uploads/media/Electricity/SC%20report-Electricity.pdf.

[xiii] “Physical Progress (Achievements)”, Ministry of New and Renewable Energy,  March  30, 2015,http://mnre.gov.in/mission-and-vision-2/achievements/.

[xiv] Appropriation Acts (Repeal) Act, 2016, http://lawmin.nic.in/ld/Act22of2016AppropriationActsrepeal.pdf.

[xv] Repealing and Amending Act, 2016, http://lawmin.nic.in/ld/Act23of2016RepealingandAmending.pdf.

[xvi] 12(1)/2014/D (Pen/PoI)- Part II, Government of India, Ministry of Defence, Department of Ex- Servicemen Welfare, November 7, 2015, http://www.desw.gov.in/sites/upload_files/desw/files/pdf/OR OP-DESW-MOD.pdf.

[xvii] Lok Sabha Unstarred Question 1696, Ministry of Defence, November 25, 2016,http://164.100.47.190/loksabhaquestions/annex/10/AU1696.pdf.

[xviii] “Year End Review 2016”, Ministry of Defence, December 31, 2016,http://pib.nic.in/newsite/PrintRelease.aspx?relid=156049.

[xix] The Compensatory Afforestation Fund Act, 2016,http://www.prsindia.org/uploads/media/Compensatory%20Afforestation/CAMPA%20act,%202016.pdf.

[xx] Rajya Sabha Unstarred Question No 82, Ministry of Road Transport and Highways, April 25, 2016.

[xxi] Rajya Sabha Unstarred Question No 914, Department of Rural Development, May 2, 2016 ,http://164.100.47.234/question/annex/239/Au914.pdf.

[xxii] Lok Sabha Unstarred Question No 4443, Ministry of Housing and Urban Poverty Alleviation, December 14, 2016, http://164.100.47.190/loksabhaquestions/annex/10/AU4443.pdf.

[xxiii] Lok Sabha Unstarred Question No 199, Ministry of Urban Development, November 16, 2016,http://164.100.47.190/loksabhaquestions/annex/10/AU199.pdf.

[xxiv] “Rolling out of National Health Assurance Mission”, Press Information Bureau, Ministry of Health and Family Welfare, July 15, 2014.

[xxv] Draft National Health Policy 2015, December 2014, Ministry of Health and Family Welfare,http://www.mohfw.nic.in/showfile.php?lid=3014.

[xxvi] Pradhan Mantri Bharatiya Jan Aushadi Pariyojana guidelines,http://janaushadhi.gov.in/data/Individuals_December_2016.pdf.

[xxvii] The Juvenile Justice (Care and Protection of Children) Act, 2015,http://www.prsindia.org/uploads/media/Juvenile%20Justice/Juvenile%20Justice%20Act,%202015.pdf.

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