Sakshi of PRS Legislative Research discusses the government's ordinance-making power in the context of the National Food Security Ordinance in an Indian Express opinion editorial. On Wednesday, the Union cabinet approved the food security ordinance. The government has already introduced a National Food Security Bill in Parliament in December 2011. Parliamentary consideration on the bill has been initiated with the standing committee submitting its recommendations and the government proposing amendments to the law. After being listed on several occasions for discussion, members of Parliament began debating the bill in the last few days of the 2013 budget session. In spite of all this, the government has chosen to promulgate an ordinance. In all likelihood, Parliament will reconvene in a few weeks for the monsoon session. In this context, it would be useful to understand the ordinance-making power of government and its usage in the recent past. Under the Constitution, the power to make laws rests with the legislature. The executive has been given the power to make laws when Parliament is not in session and "immediate action" is necessary. In such scenarios, the president can issue an ordinance on the advice of the executive, to have the same effect as an act of Parliament. In the 1980s, the Supreme Court was confronted with a case where a state government repeatedly re-promulgated ordinances that had lapsed in previous assembly sessions. This led the SC to examine the ordinance-making power of government. The SC reasserted the constitutional principle that the primary law-making power rests with the legislature and not the executive. The executive is only given the legislative power to issue an ordinance to meet an "emergent situation". Such a situation arose in 2011 when, given that students were awaiting their degrees on the completion of their course, the government issued an ordinance to grant IIIT-Kancheepuram the status of an institute of national importance so that students could be awarded their degrees. Data over the last 60 years indicates that the highest number of ordinances, 34, were passed in 1993. Over the 15th Lok Sabha (2009-2013), there have been 16 ordinances, indicating a decline in the number of ordinances being issued every year. Once an ordinance is framed, it is to be laid before Parliament within six weeks of its first sitting. Parliament is empowered to either choose to pass the ordinance as law or let it lapse. Once the ordinance is laid in Parliament, the government introduces a bill addressing the same issue. This is typically accompanied by a memorandum tabled by the government, explaining the emergent circumstances that required the issue of an ordinance. Thereafter, the bill follows the regular law-making process. If Parliament does not approve the ordinance, it ceases to exist. The drafters of the Constitution created this check on the law-making power of the executive to reinforce the notion that law-making will remain the prerogative of the legislature. Earlier this year, in the aftermath of the Delhi gangrape, public pressure led the government to appoint a three-member committee under the late Justice J.S. Verma to suggest changes to laws relating to crimes against women. An amendment bill had already been pending in Parliament. In spite of this, the government brought in the Criminal Law Ordinance, giving effect to some of the committee's recommendations. Once Parliament reconvened, the government introduced a fresh bill replacing the ordinance, seeking to create more stringent provisions on matters related to sexual offences. It passed muster in both Houses. While the Criminal Law Ordinance is an illustration of an ordinance successfully passing through Parliament, there are examples of ordinances that have lapsed because they were not approved by Parliament. In 2004, a week after the winter session ended, the government issued an ordinance to give the Pension Fund Regulatory and Development Authority statutory powers as a regulator. Due to political opposition, the ordinance lapsed and, subsequently, the bill lapsed at the end of the 14th Lok Sabha. The government re-introduced it as a bill in 2011, which is currently pending in Parliament. Although the government has used its power to issue a food security ordinance, the law guaranteeing this right will have to stand scrutiny in Parliament. What remains to be seen is how Parliament debates the right to food in the upcoming monsoon session. That should give us some food for thought. For an analysis of the National Food Security Bill, refer to Sakshi's blog post here.

Since March, 2020, there has been a consistent rise in the number of COVID-19 cases in India.  As of May 18, 2020, there were 96,169 confirmed cases of the infectious disease, of which 3,029 persons died.  To contain the spread of COVID-19 in India, the central government imposed a nation-wide lockdown on March 24 till April 14, now extended till May 31.  To ensure continued supply of agriculture produce during the lockdown and control the spread of the disease, some states have amended their respective Agriculture Produce Marketing Committee (APMC) laws.  This blog explains the manner in which agriculture marketing is regulated in India, steps taken by the centre for the agriculture sector during the COVID-19 crisis, and the recent amendments in the APMC laws that are being announced by various states. 

How is agriculture marketing regulated in India?

Agriculture falls under the State List of the Constitution.  Agriculture marketing in most states is regulated by APMCs established by state governments under the respective APMC Acts.  The APMCs provide infrastructure for marketing of agricultural produce, regulate sale of such produce and collect market fees from such sale, and regulate competition in agricultural marketing.  In 2017, the central government released the model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017 to provide states with a template to enact new legislation and bring comprehensive market reforms in the agriculture sector.  The 2017 model Act aims to allow free competition, promote transparency, unify fragmented markets and facilitate flow of commodities, and encourage operation of multiple marketing channels.  In November 2019, the 15th Finance Commission (Chair: Mr N. K. Singh) in its report provided that states which enact and implement all features of this Model Act will be eligible for certain financial incentives.

What steps were taken by the central government in light of COVID-19?

On April 2, the Ministry of Agriculture and Farmers’ Welfare launched new features of the electronic-National Agriculture Market (e-NAM) platform to strengthen agriculture marketing by reducing the need of farmers to physically come to wholesale mandis for selling their harvested produce.  The e-NAM platform provides for contactless remote bidding and mobile-based any time payment for which traders do not need to either visit mandis or banks.  This helps in ensuring social distancing and safety in the APMC markets to prevent the spread of COVID-19.  

On April 4, 2020, the Ministry of Agriculture and Farmers’ Welfare issued an advisory to states for limiting the regulation under their APMC Acts.  The advisory called for facilitating direct marketing of agricultural produce, enabling direct purchase of the produce from farmers, farmer producer organisations, cooperatives by bulk buyers, big retailers, and processors. 

On May 15, 2020 the Union Finance Minister announced certain reforms for the agriculture sector of the country to reduce the impact of COVID-19 and the lockdown.  Some of the major reforms include: (i) formulating a central law to ensure adequate choices to farmers to sell agricultural produce at attractive prices, barrier free inter-state trade, and framework for e-trading of agricultural produce, (ii) amending the Essential Commodities Act, 1955 to enable better price realisation for agricultural produce such as all cereals, pulses, oilseeds, onions, and potatoes, and (iii) creating a facilitative legal framework for contract farming, to enable farmers to engage directly with processors, large retailers, and exporters.

Which states have made changes to agriculture marketing laws?

The Uttar Pradesh Cabinet has approved an ordinance, and Madhya PradeshGujarat, and Karnataka have promulgated ordinances, to relax regulatory aspects of their APMC laws.  These Ordinances are summarised below:

Madhya Pradesh 

On May 1, 2020, the Madhya Pradesh government promulgated the Madhya Pradesh Krishi Upaj Mandi (Amendment) Ordinance, 2020.  The Ordinance amends the Madhya Pradesh Krishi Upaj Mandi Act, 1972.  The 1972 Act regulates the establishment of an agricultural market and marketing of notified agricultural produce.  The following amendments have been made under the Ordinance:

  • Market yards:   The 1972 Act provides that in every market area, there should be a market yard, with one or more sub-market yards, for conducting all marketing activities such as assembling, grading, storage, sale, and purchase of the produce.  The Ordinance removes this provision and specifies that in the state, there may be: (i) a principal market yard and sub-market yard managed by the APMC, (ii) a private market yard managed by a person holding a license (granted by the Director of Agriculture Marketing), and (iii) electronic trading platforms (where trading of notified produce is done electronically through internet).  

  • Director of Agricultural Marketing: The Ordinance provides for the appointment of the Director of Agricultural Marketing by the state government.  The Director will be responsible for regulating: (i) trading and connected activities for the notified agricultural produce, (ii) private market yards, and (iii) electronic trading platforms.   He may also grant licenses for these activities.  

  • Market fee: The Ordinance also provides that market fee for trading under licenses granted by the Director of Agricultural Marketing will be levied as prescribed by the state government.

Gujarat

On May 6, 2020, the Gujarat government promulgated the Gujarat Agricultural Produce Markets (Amendment) Ordinance, 2020.  The Ordinance amends the Gujarat Agricultural Produce Markets Act, 1963.  The amended Act is called the Gujarat Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 1963.  Key amendments made under the Ordinance are as follows:

  • Regulation of livestock market:   The Ordinance brings the regulation of marketing of livestock such as cow, buffalo, bullock, bull, and fish under the ambit of this Act. 

  • Unified market area:   The Ordinance provides that the state government may declare the whole state as one unified market area through a notification.  This can be done with the purpose of regulation of marketing of notified agricultural produce.

  • Unified single licence:  The Ordinance provides for the grant of a single unified trading license.  The license will be valid across the state in any market area.  Existing trade licenses must be converted into the single unified licenses within six months from the date of commencement of the Ordinance.  

  • Markets for conducting trading:  The Ordinance allows the state government to notify any place in the market area as the principal market yard, sub-market yard, market sub-yard, or farmer consumer market yard for the regulation of marketing of notified agricultural produce.  Certain places in the market area can also be declared a private market yard, a private market sub-yard, or a private farmer-consumer market yard.  The Ordinance adds that the notified agricultural produce may also be sold at other places to a licence holder, if especially permitted by a market committee.

  • Market sub-yards:   The Ordinance provides that a market area should have market-sub yards (warehouse, storage towers, cold storage enclosure buildings or such other structure or place or locality).  Further, it also provides that the owner of a warehouse, silo, cold storage or such other structure or place notified as market sub-yard, may collect a market fee on notified agricultural produce.  He may also collect user charge on de-notified agricultural produce transacted at the market sub-yard.  The rate of the fees should not exceed the rates notified by the state government.  However, no market fee shall be collected from farmers.

  • E-trading:  The Ordinance provides for the establishment and promotion of electronic trading (e-trading) platforms.  It provides that a license granted by the Director of Agricultural Marketing is necessary to establish an e-trading platform.   Further, it provides that applications on the e-trading platform shall be inter-operable with other e-platforms as per specifications and standards laid down by the Director.  This has been done to evolve a unified National Agricultural Market and integrate various e-platforms.

Karnataka

On May 16, the Karnataka government promulgated the Karnataka Agricultural Produce Marketing (Regulation and Development) (Amendment) Ordinance, 2020.  The Ordinance amends the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966.  The 1966 Act regulates the buying and selling and the establishment of markets for agricultural produce throughout the state.  Key amendments made under the Ordinance are as follows:

  • Markets for agricultural produce:  The 1966 Act provides that no place except the market yard, market sub-yard, sub-market yard, private market yard, or farmer - consumer market yard shall be used for the trade of notified agricultural produce.  The Ordinance substitutes this to provide that the market committee shall regulate the marketing of notified agricultural produce in the market yards, market sub-yards and submarket yards.  Thus, the Act no longer bars any place for the trade of notified agricultural produce.

  • Penalty:  The 1966 Act provides that whoever uses any place for purchase or sale of notified agricultural produce can be punished with imprisonment of up to six months, or a fine of up to Rs 5,000, or both.  The Ordinance removes this penalty provision from the Act.

Uttar Pradesh

On May 6, the Uttar Pradesh Cabinet approved the Uttar Pradesh Krishi Utpadan Mandi (Amendment) Ordinance, 2020.  According to the state’s press release, the Uttar Pradesh government has decided to remove 46 fruits and vegetables from the ambit of the Uttar Pradesh Krishi Utpadan Mandi Act, 1964.   The 1964 Act provides for the regulation of sale and purchase of notified agricultural produce and for the establishment and control of agricultural markets in Uttar Pradesh.  

  • Certain fruits and vegetables exempted from the provisions of the Act:  These fruits and vegetables include mango, apple, carrot, banana, and ladies’ finger.  The proposed amendment aims to facilitate the purchase of these products directly from farmers from their farms.  Farmers will be allowed to sell these products at the APMC mandis as well, where they will not be charged the mandi fee.  Only the user charge will be levied as prescribed by the state government.   As per the state government, this will entail a loss of revenue of approximately Rs 125 crore per year to the APMCs.

  • License:   Specific licenses can be procured to carry on trade at places other than APMC markets.  This will encourage the treatment of warehouses, silos, and cold storages as mandis.  The owners or managers of such establishments can charge the user fee for managing the mandi.   Further, unified license can be used to trade at village level.