This article is written by Raunak Sood, student at Bennett University, Greater Noida.
Since November 2020, the farmers mainly from the North Indian States have been protesting against the recently enacted laws by the parliament of India, the said laws are:
- Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 – This law envisages that the peasants shall be given the permission to sell their agricultural output outside the market which is regulated by the State. Hence, the farmers have been given a right to exercise their choice in the matter as to whom they want to sell their agricultural output.
- Essential Commodities (Amendment) Act, 2020 – This law allows the farmers to sell their produce outside the local markets of the respective State and it prohibits the State government from levying any kind of tax on the peasants who are trying to sell their market output within the State or outside the State.
- Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 – The concept of contract farming has been set up in this Act, this is another beneficial law because the farmers will get a guaranteed price on the produce which they are selling to the contract-holder, but the only point which is unsettling is that there might be some big corporate which might take advantage of farmers and negotiate lower prices in the contract.
Hereinafter point a, b and c are collectively referred to as the “agricultural reform laws”.
What is a major part of law and economics behind the legislative intent of the bills
- The economics and law surrounding the agricultural reform laws is really vast wherein one of the major benefits is the avoidance of monopoly and cartelization of the food industry of India because cartel is a group of people who are producing the crops for consumption, if such people get together, they can fix higher prices without any transparency and it might be difficult to prosecute such cartels because of their influence, power and difficulty in carrying out investigations when an attempt to prosecute such cartels is made.
- The agricultural reform law follows the multiplier effect which is described as an injection by the Government to spend in terms of huge exports or investment, the agricultural reform law promotes contract farming which shall help the Government in securing taxes from the beneficiary of the contract which is supposedly the major corporations which are going to sell the produce of the farmer in the market, this will ensure that the Government Income increases without putting the farmers to the huge tax burden.
- There will be a transfer of risk because of the contract and there is no limit on the stocking of farm produce, this economic benefit can be explained by the using the investment rule of macroeconomics therein the more the storage capacity of a particular commodity increase in a country, the more amount of export can take place, thereby making the exporting country well-off than before.
Why are the farmers against such law
- The farmers have an apprehension that the Government is trying to favour the big companies and corporates as the said companies have a higher pedestal and deep pockets to influence the farmers for obtaining lower prices from the farmers, thereby leading to the exploitation of the farmers which violates Art. 21 (Right against exploitation).
- The farmers are afraid that in due course of time, the Government might move to abolish the MSP system in place, and the farmers would be induced to sell their total agricultural output at a drastically reduced price compared to the present-day selling price of their crop.
Legal provisions affecting the agricultural sector until the agricultural reform law was enacted
Under S. 80P of the Income Tax Act, 1961, the cooperatives consisting mainly of farmers were given a tax benefit, but such cooperatives were not accepting foreign investment even though the Government tried development programmes like NCDC (National Cooperative Development Corporation), therein NCDC is a statutory body whose goal was to plan and promote agricultural growth by giving guidance and ideas to peasants of India. But this tax benefit was taking a toll on the Government income.
An analysis regarding the questions surrounding the legality of agricultural reform laws
The author is of the opinion that the agricultural reform laws are arbitrary and unconstitutional because, on an application of the doctrine of arbitrariness, the main intent was to provide an economic benefit to the farmers so that they can sell their produce outside the boundaries of their local State and get a fixed amount of money by selling their produce on a contractual basis, but at the same time the said law despite having economic benefits is violating the right to livelihood of the farmers on a short-term basis, and there was no proper public consultation process followed by the Government. Therefore, the author is of the view that there is no rational nexus between the differentia and the object sought to be achieved by such law, wherein there is no fairness in the procedure followed.
What are the observations made by the Supreme Court on the agricultural reforms
In the case of Rakesh Vaishnav v. Union of India & Ors., WP (Civil) No. 1118/2020, the court noted that it did not want to hinder any protest which was going on because every citizen has the fundamental right to a peaceful protest as long as they are maintaining public order without causing any violence, the court proposed on constituting a committee with esteemed members, because even though the said agricultural laws were presumed to be constitutional, but during the pendency of a matter before the Supreme Court, the court decided to stay the implementation of the farm laws while the adjudication of the constitutionality of the laws was pending before the apex court.
Conclusion and Suggestions
The author hereby concludes that as per his own personal opinion the farm laws are unconstitutional and arbitrary in nature, therein the author would suggest that the government should guarantee the MSP and give legal guarantee to provide the farmers with judicial help incase the farmers are being exploited; regulate the farm market so that there are fair competition and no over the hoarding of grains or other food products.
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