In law, the addition or deletion a single punctuation or a single word can have a major impact on the effect of that law. One such example can be seen from the recommended changes in the Civil Liability for Nuclear Damage Bill, 2010 by Parliament’s Standing Committee. The Civil Liability for Nuclear Damage Bill, 2010 was introduced in the Lok Sabha on May 7, 2010. The Bill was referred to the Parliamentary Committee on Science and Technology, Environment and Forests, which submitted its report on the Bill yesterday (August 18, 2010). The Committee has made a number of recommendations regarding certain clauses in the Bill (See summary here). One of these may have the effect of diluting the provision currently in the Bill. The main recommendations pertain to:
Clause 17 of the Bill which gives operators a right of recourse against those actually causing damage had been opposed as it was felt that it was not strong enough to hold suppliers liable in case the damage was caused by them. Clause 17 gave a right of recourse under three conditions. The exact clause is reproduced below: The operator of a nuclear installation shall have a right of recourse where — (a) such right is expressly provided for in a contract in writing; (b) the nuclear incident has resulted from the wilful act or gross negligence on the part of the supplier of the material, equipment or services, or of his employee; (c) the nuclear incident has resulted from the act of commission or omission of a person done with the intent to cause nuclear damage. Under this clause, a right of recourse exists when (a) there is a contract giving such a right, or (b) the supplier acts deliberately or in a grossly negligent manner to cause nuclear damage, or (c) a person causes nuclear damage with the intent to do so. If any of the three cases can be proved by the operator, he has a right of recourse. The Committee has stated that “Clause 17(b) gives escape route to the suppliers of nuclear materials, equipments, services of his employees as their willful act or gross negligence would be difficult to establish in a civil nuclear compensation case.” It recommended that Clause 17(b) should be modified to cover consequences “of latent or patent defect, supply of sub-standard material, defective equipment or services or from the gross negligence on the part of the supplier of the material, equipment or service.” The Committee also recommended another change in Clause 17. It recommended that clause 17(a) may end with “and”. This provision may dilute the right of recourse available to operators. The modified clause 17 would read as: The operator of a nuclear installation shall have a right of recourse where — (a) such right is expressly provided for in a contract in writing; and, (b) the nuclear incident has resulted as a consequence of latent or patent defect, supply of sub-standard material, defective equipment or services or from the gross negligence on the part of the supplier of the material, equipment or services.; (c) the nuclear incident has resulted from the act of commission or omission of a person done with the intent to cause nuclear damage. This implies that for Clauses 17(b) or (c) to be applicable, the condition specified in clause 17(a) has to be compulsorily satisfied. Two examples highlight the consequence of the recommended change in Clause 17(a) of the Bill:
The effect of the changes recommended by the committee may thus dilute the provision as it exists in the Bill. The table below compares the position in the Bill and the position as per the Standing Committee’s recommendations:
| Right of recourse - The Bill gives operators a right to recourse under three conditions: (a) if there is a clear contract; (b) if the damage is caused by someone with intent to cause damage; (c) against suppliers if damage is caused by their wilful act or negligence. | In the Bill the three conditions are separated by a semi-colon. The Committee recommended that the semi-colon in clause 17(a) should be replaced by “and”. | This might imply that all three conditions mentioned need to exist for an operator to have recourse. |
| Right to recourse against suppliers exists in cases of “willful act or gross negligence on the part of the supplier”. (Clause 17) | The Committee felt that the right of recourse against suppliers is vague. It recommended that recourse against the supplier should be strengthened. The supplier is liable if an incident has occurred due to (i) defects, or (ii) sub-standard material, or (iii) gross negligence of the supplier of the material, equipment or services. | The variance with the Convention continues to exist. |
Minimum Support Price (MSP) is the assured price at which foodgrains are procured from farmers by the central and state governments and their agencies, for the central pool of foodgrains. The central pool is used for providing foodgrains under the Public Distribution System (PDS) and other welfare schemes, and also kept as reserve in the form of buffer stock. However, in the past few months, there have been demands to extend MSP to private trade as well and guarantee MSP to farmers on all kinds of trade. This blogpost looks at the state of public procurement of foodgrains in India and the provision of MSP.
Is MSP applicable for all crops?
The central government notifies MSP for 23 crops every year before the Kharif and Rabi seasons based on the recommendations of the Commission for Agricultural Costs and Prices, an attached office of the Ministry of Agriculture and Farmers’ Welfare. These crops include foodgrains such as cereals, coarse grains, and pulses. However, public procurement is largely limited to a few foodgrains such as paddy (rice), wheat, and, to a limited extent, pulses (Figure 1).
Figure 1: Percentage of crop production that was procured at MSP in 2019-20
Sources: Unstarred Question No. 331, Lok Sabha, September 15, 2020; PRS.
Since rice and wheat are the primary foodgrains distributed under PDS and stored for food security, their procurement level is considerably high. However, the National Food Security Act, 2013 requires the central and state governments to progressively undertake necessary reforms in PDS. One of the reforms requires them to diversify the commodities distributed under PDS over a period of time.
How does procurement vary across states?
The procurement of foodgrains is largely concentrated in a few states. Three states (Madhya Pradesh, Punjab, and Haryana) producing 46% of the wheat in the country account for 85% of its procurement (Figure 2). For rice, six states (Punjab, Telangana, Andhra Pradesh, Chhattisgarh, Odisha, and Haryana) with 40% of the production have 74% share in procurement (Figure 3). The National Food Security Act, 2013 requires the central, state, and local governments to strive to progressively realise certain objectives for advancing food and nutritional security. One of these objectives involves geographical diversification of the procurement operations.
Figure 2: 85% wheat procurement is from three states (2019-20)
Sources: Department of Food and Public Distribution; PRS.
Figure 3: 76% of the rice procured comes from six states (2019-20)
Sources: Department of Food and Public Distribution; PRS.
Is MSP mandatory for private trade as well in some states?
MSP is not mandatory for purchase of foodgrains by private traders or companies. It acts as a reference price at which the government and its agencies procure certain foodgrains from farmers.
In September 2020, the central government enacted a new farm law which allows anyone with a PAN card to buy farmers’ produce in the ‘trade area’ outside the markets notified or run by the state Agricultural Produce Marketing Committees (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. In October 2020, Punjab passed a Bill in response to the central farm law to prohibit purchase of paddy and wheat below MSP. Any person or company compelling or pressurising farmers to sell below MSP will be punished with a minimum of three-year imprisonment and a fine. Note that 72% of the wheat and 92% of the rice produced in Punjab was purchased under public procurement in 2019-20.
Similarly, in November 2020, Rajasthan passed a Bill to declare those contract farming agreements as invalid where the purchase is done below MSP. Any person or company compelling or pressurising farmers to enter into such an invalid contract will be punished with 3 to 7 years of imprisonment, or a fine of minimum five lakh rupees, or both. Both these Bills have not been enacted yet as they are awaiting the Governors’ assent.
How has MSP affected the cropping pattern?
According to the central government’s procurement policy, the objective of public procurement is to ensure that farmers get remunerative prices for their produce and do not have to resort to distress sale. If farmers get a better price in comparison to MSP, they are free to sell their produce in the open market. The Economic Survey 2019-20 observed that the regular increase in MSP is seen by farmers as a signal to opt for crops which have an assured procurement system (for example, rice and wheat). The Economic Survey also noted that this indicates market prices do not offer remunerative options for farmers, and MSP has, in effect, become the maximum price that the farmers are able to realise.
Thus, MSP incentivises farmers to grow crops which are procured by the government. As wheat and rice are major food grains provided under the PDS, the focus of procurement is on these crops. This skews the production of crops in favour of wheat and paddy (particularly in states where procurement levels are high), and does not offer an incentive for farmers to produce other items such as pulses. Further, this puts pressure on the water table as these crops are water-intensive crops.
To encourage crop diversification and thereby reduce the consumption of water, some state governments are taking measures to incentivise farmers to shift away from paddy and wheat. For example, Haryana has launched a scheme in 2020 to provide Rs 7,000 per acre to those farmers who will use more than 50% of their paddy area (as per the area sown in 2019-20) for other crops. The farmers can grow maize, bajra, pulses, or cotton in such diversified area. Further, the crop produce grown in such diversified area under the scheme will be procured by the state government at MSP.
