FARM BILLS: THE POLITICS AND ECONOMICS OF THE PROTESTS

Three agriculture-related Bills announced as part of the Atmanirbhar Bharat package in May, and cleared and notified by the Union cabinet in June, have caused unrest, largely in Punjab, Haryana and, to some extent, western Uttar Pradesh. Food processing minister Harsimrat Kaur Badal of the Shiromani Akali Dal has resigned in protest in the first major internal political setback for the ruling Bharatiya Janata Party in its second term. Here’s a look at the major pain points of the Bills.

What are these Bills?

The three Bills — the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill; the Farmers (Empowerment and Protection) Agreement On Price Assurance and Farm Services Bill; and the Essential Commodities (Amendment) Bill — seek to provide an ecosystem for farmers and traders to sell and buy outside the designated mandis. And also a framework for contract farming, besides exempting certain agriculture commodities from the purview of the Essential Commodities Act.

Whatarethemajor arguments against them?

There are three. One: The fear that once these Bills become law, the existing system of minimum support price (MSP) and procurement will be done away with. The worry is that the Food Corporation of India, if it sees value in going for off-mandi transactions, will gradually move out of the states and the entire mechanism of procurement, which has been the backbone of farming in the two states since the Green Revolution days, will crumble.

The government, say experts, is keen to procure from other states besides Punjab and Haryana, and bring more farmers within the MSP bracket. It also wants to cut down on costs, since Punjab and Haryana charge high taxes on mandi operations, the experts add.

Two: Once out-of-mandi transactions begin, the states’ Agricultural Produce Market Committee (APMCS) or regulated markets will be starved of funds. Once farmers start selling outside the mandis (rules say anyone with a PAN card can buy directly from farmers), APMC revenues will take a hit.

Three: That the Bills, particularly the one on contract farming, will lead to corporatisation of farming and farmers will be at the mercy of big retailers and corporations.

Will these Bills affect MSP and corporatise agriculture?

No, they won’t. The Bills do no talk about altering the MSP structure. As for corporatisation of farming, the government says the Bills have sufficient inbuilt safeguards to ensure that a farmer does not lose ownership of his land or is forced to enter into agreements detrimental to his interest.

The government also says the states will remain free to run the APMCS, levy taxes there and declare any area as an APMC or market yard. But in areas outside the mandis, also declared as trade areas, no tax can be levied by any state or local body. Here all will be free to buy and sell their commodities. The Centre says this only provides an alternative marketing option to the farmers.

Currently, just about 30-35 per cent of the cereals, pulses, vegetables and oilseed produced are sold through regulated markets. The rest are sold outside regulated markets, but some states charge a fee on such out-mandi transactions as well. The legislations seek to lower this fee.

The Centre says the Bills will only help in boosting private investment in farming and fill the critical gaps in storage, mechanised transport and distribution.

Whyarepunjaband Haryana upset, and not other agrarian states?

These states fear losing a big chunk of their revenues. The Commission for Agricultural Costs and Prices, in its latest rabi report, noted that in 201920, the statutory taxes levied on wheat in Punjab and Haryana were 5.5 per cent and 4.5 per cent, respectively. In Uttar Pradesh and Madhya Pradesh, these were lower (2.5 per cent and 2 per cent, respectively).

These taxes go up further when incidentals such rural development and infrastructure development cess, commission to society, nirashrit shulk (sort of destitute fee) and so on are levied. For Punjab, the total taxes come to about 8.5 per cent, the highest in India. In Haryana, these are 67 per cent.

According to some estimates, Punjab stands to lose ~4,000-5,000 crore annually as mandi revenue if transactions move outside. And Haryana could lose around ~1,000-1,500 crore per year.