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Government decides to repeal the three farm laws

Context:

Prime Minister Narendra Modi announced the repeal of three contentious farm laws, assuring farmer groups protesting against them for the past year that the legislative process for the repeal would be completed in the upcoming Winter Session of Parliament.

Relevance:

GS-III: Agriculture (Storage, transport & marketing of agro-produce and related issues & constraints; supply chain management), GS-II: Governance (Government Policies and Initiatives, Issues arising out of the design and implementation of Policies), GS-II: Polity and Constitution

Dimensions of the Article:

  1. Key provisions of three bills
  2. Why did the farmers protest?
  3. How does repealing a law work?
  4. Process to repeal a law
  5. Way forward

Key provisions of three bills

I: The Bill on Agri Market

  • The trade of farmers produce:  it seeks to allow farmers to sell their produce outside APMC ‘mandis’ to whom they want. Anyone can buy their produce even at their farm gates. Such trade can be conducted in an ‘outside trade area’, i.e., any place of production, collection, and aggregation of farmers’ produce including: (i) farm gates, (ii) factory premises, (iii) warehouses, (iv) silos, and (v) cold storages.
  • Electronic trading: The Ordinance permits the electronic trading of scheduled farmers’ produce (agricultural produce regulated under any state APMC Act) in the specified trade area. 
  • Market fee abolished: The Ordinance prohibits state governments from levying any market fee, cess or levy on farmers, traders, and electronic trading platforms for trade of farmers’ produce conducted in an ‘outside trade area’.

Significance:

  • It will not shut down the APMC but to expand the farmers choice.
  • If a farmer believes a better deal is possible with some other private buyer then he can take that option instead of selling in the APMC mandi.
  • The farmers will get better price through competition and cost cutting on transportation.
  • The farmers will get out of the clutches of the monopoly of APMC mandis and evade the rent-seeking behaviour of the traditional intermediaries (called arhatiyas).

II: The Legislation on Contract Farming

  • Farming agreement:  it allows the farmers to entre into a contract with agri business firms or large retailers on pre agreed price of their produce. The minimum period of an agreement will be one crop season, or one production cycle of livestock.  The maximum period is five years, unless the production cycle is more than five years.
  • Pricing of farming produce: The price of farming produce should be mentioned in the agreement.  For prices subjected to variation, a guaranteed price for the produce and a clear reference for any additional amount above the guaranteed price must be specified in the agreement. 
  • Dispute Settlement: A farming agreement must provide for a conciliation board as well as a conciliation process for settlement of disputes.

Significance:

  • It will help the small and marginal farmers as the legislation will transfer the risk of market unpredictability from farmers to sponsors.

III: The Essential commodities (Amendment) bill 2020

  • Regulations of food items:  it seeks to remove commodities like cereals, pulses, oilseeds, onion and potatoes from the lists of essential commodities. It means the legislation will do away with the imposition of stock-holding limits on such items except under extraordinary circumstances such as war and natural calamities.
  • Stock limit: The Ordinance requires that imposition of any stock limit on agricultural produce must be based on price rise.

Significance:

  • The economic agents to stock food articles freely without the fear of being prosecuted for hoarding.  This will create a competitive environment in Agri Market.
  • It will also attract the private sector and foreign direct investment into the agriculture sector.

Why did the farmers protest?

  • The legislations are likely to impact influential commission agents in mandis, who do not want their grip over farmers to be weaken.
  • The state governments of Punjab and Haryana will be affected most because of loss of mandi tax, a good source of revenue.
  • The middle men will not only lose their commission but traditional business.
  • The protesters fear that it will end the MSP regime in due course.
  • It will make APMC (mandis) as irrelevant.
  • The farmers may risk of loosing land rights under contract farming.
  • Farmers, especially in Punjab and Haryana where MSPs are more prominently employed, are suspicious of what the markets will offer and how the “big companies” will treat them.

How does repealing a law work?

  • Repealing a law one of the ways to nullify a law.
  • Legislations can also come with a “sunset” clause – which is a measure within a law that provides that the law shall cease to have effect after a specific date, unless the law is extended by legislative action.
  • For laws that do not have a sunset clause, Parliament has to pass another legislation to repeal the law.

Process to repeal a law

Article 245: Extent of laws made by Parliament and by the Legislatures of States:

  • Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State.
  • It is from this article Parliament draws the power to repeal a law.
  • A law can be repealed either in its entirety, in part, or even just to the extent that it is in contravention of other laws.

Either by use of an ordinance, or through legislation

  • In case an ordinance is used, it would need to be replaced by a law passed by Parliament. If the ordinance lapses because it is not approved by Parliament, the repealed law can be revived.
  • The government can also bring legislation to repeal the farm laws. It will have to be passed by both Houses of Parliament, and receive the President’s assent before it comes into effect.
  • Usually, Bills titled Repealing and Amendment are introduced for this purpose.

Way forward

  • Consultative decision making would always be more sustainable and easier to enforce.
  • Further moves on agriculture sector reforms must also draw lessons from the making of laws, and now the repeal, of the three farm laws.
  • Therefore, in the future, the government should rebuild trust among the stakeholders to plant the seeds of reforms.

-Source: The Hindu

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