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This article is written by Maulik Dabholkar.

Agriculture employs 58% of India’s population and contributes to 15% of GDP. In 2020 the sector has grown by 4%. According to the National Statistical Office’s estimates, Agricultural sector was the only sector to grow for April-June 2020 among eight used to compute India’s Gross Domestic Product (GDP). It comes as a silver lining in an economy that has seen a GDP registered at negative 23.9 percent, but it cannot be overlooked that this increase in GVA can be accounted for by an excellent Rabi season harvest that coincided with the initial period of the nationwide lockdown.

‘Agriculture Sector Has Beaten Pandemic, Latest GDP Figures Show’ (Downtoearth.org.in, 2020) <https://www.downtoearth.org.in/news/agriculture/agriculture-sector-has-beaten-pandemic-latest-gdp-figures-show-73145> accessed 19 October 2020.

The Government is now looking to capitalize on an otherwise ailing and protected sector by modernising and liberalising it by way of three bills that were passed in the Parliament.

The three bills that were passed are the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill and Essential Commodities (Amendment) Bill.

The Farmers Act aims to modernise the agricultural sector by reducing the role of the Agricultural Produce Market Committee Mandis which have served as the middlemen who bring agricultural produce from the farmers to the market. From the government’s perspective it is important to reduce the role of the middlemen as the mandis have been made into pools of corruption and local politics. 

Currently India’s small farmers (those owning less than 2 ha of land) comprise 78% of all farmers, but own only 33% of the total cultivated land and produce 41% of the country’s food-grains. Their productivity is somewhat higher than that of medium- and large-size farms.

Abhishek Sikdar, ‘The New Farmers’ Bill And It’s Effects’ (Times of India Blog, 2020) <https://timesofindia.indiatimes.com/blogs/economic-update/the-new-farmers-bill-and-its-effects/> accessed 19 October 2020.

The government aims to raise farmers’ income, give them independence from controlled market spaces and to fetch them a better price for their produce. 

The Bills promise to create a system in which the farmers and traders can sell their produce outside the current Mandis that they are limited to. It is said to help reduce the cost of transportation for inter-state trade and also set up frameworks for farmers to engage with agri-business companies, retailers, technology and exporters. 

The Essential Commodities (Amendment) Bill also removed cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. This move was done to allay fears of private investors over the interference of excessive regulations by the government in their operations. On the flipside, farmers have been worried and protesting about the lack of clarity regarding the Minimum Support Price (MSP) that they otherwise receive for their produce. By means of MSP, farmers could sell at a fixed price decided by the government which would higher than the prevalent market rate and thus ensure their labour is profitable. 

The Centre currently fixes MSPs for 23 farm commodities — 7 cereals (paddy, wheat, maize, bajra, jowar, ragi and barley), 5 pulses (chana, arhar/tur, urad, moong and masur), 7 oilseeds (rapeseed-mustard, groundnut, soyabean, sunflower, sesamum, safflower and nigerseed) and 4 commercial crops (cotton, sugarcane, copra and raw jute) — based on the recommendations of the Commission for Agricultural Costs & Prices (CACP), which in itself is not a statutory body and hence the onus of execution is entirely on the government. 

‘Organisation’ (Cacp.dacnet.nic.in, 2020) <https://cacp.dacnet.nic.in/content.aspx?pid=32> accessed 19 October 2020.

The lack of MSP can be a double edged sword to the farmers, they can benefit greatly or they can suffer the harshness of the free market. For now, this is but pure speculation as there is no clarity as such from the government regarding MSP. It goes without saying that perhaps the government and policy makers will implement safeguards to protect farmers from the same.

While farmers around the country protest, it is implied that the government is moving towards reforming the agricultural sector with privatisation and is hoping to generate flux of foreign capital into the sector by way of FDI. We are being ushered into an age of large scale contract farming and we might see more public private company partnerships in the same. That is where the Land Acquisition Act of 2013 comes into play.

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 came into force in 2014 as an amendment to The Land Acquisition Act of 1894. The previous iteration of the Act, passed by the British during their rule served as a blueprint for a government to seize land from owners. The term “land acquisition” as opposed to ‘purchase of land’ implies a forcible takeover of privately owned land by the government for “public purpose” projects. Public Purpose projects as defined in the Act, include 

  • Strategic purposes for the naval, military, air forces and armed forces of the Union of India
  • projects involving agro-processing, supply of inputs to agriculture, warehousing, cold storage  facilities,  marketing  infrastructure  for  agriculture  and  allied  activities  such  as  dairy, fisheries,  and  meat  processing,  set  up  or  owned  by  the  appropriate  Government  or  by  a farmers’ cooperative or by an institution set up under a statute
  • project for industrial corridors or mining activities,
  • project for water harvesting and water conservation structures, sanitation;
  • project for Government administered, Government aided educational and research schemes or institutions
  • project for sports, health care, tourism, transportation or space programme;
  • any infrastructure facility as may be notified in this regard by the Central Government and after tabling of such notification in Parliament;
  • project for project affected families;
  • project for housing for such income groups, as may be specified from time to time by the appropriate Government;

In case of acquisition for:

  • Private companies, the prior consent of at least eighty per cent, of those affected families is required
  • Public private partnership projects, the prior consent of at least seventy per cent of those affected families is required 

By process prescribed by appropriate Government.

The LARR of 2013 has sought to bring some fairness to the earlier imperial and draconian method of acquisition followed by the Land Acquisition Act of 1894. Though we have seen some caveats added to protect the farmlands of agricultural families, it can be said that this Act will see further action and implementation in the years to come especially in light of the new modernisation of the agricultural sector. We are likely to see more farmers opt for the compensation award if they are unable to keep up with the expectations of contract farming.

Though the compensation award given is up to 4 times the market value of the land, a farmer without his land, usually with a large family generally uneducated or unskilled, will find it hard to generate a sustainable source of income for years.

Furthermore, the Karnataka Assembly passed the Karnataka Land Reforms (Second Amendment) Bill, 2020 which removes the almost all restrictions on purchase of farm lands. The Act repeals Section 79(A) that sets a limit of non-agricultural income at Rs 25 lakh to buy agricultural land, Section 79(B) that bars non-agriculturists from purchasing agricultural lands, and Section 79 (C) that deals with penalty for falsely claiming eligibility to hold agricultural land.

It also makes certain amendments to Section 80 and states that the Class-A irrigated land (irrigated with water from a dam) can be used only for agricultural purposes. 

The Act looks to increase the ceiling from 10 units of which one unit of land is 5.4 acres to 20 units for a family up to four people, and from 20 units to 40 units for large families above five people. Protesting farmers’ organisations are of the view that this increase in ceiling limit for land will enable private organisations to purchase large amounts of farm land. It is relevant to note that the party of the Central government is the same as is prevalent in the state of Karnataka.

‘Assembly Passes Land Reforms Bill For Removing Restrictions On Purchase Of Land By Non-Agriculturists’ (The Hindu, 2020) <https://www.thehindu.com/news/national/karnataka/assembly-passes-land-reforms-bill-for-removing-restrictions-on-purchase-of-land-by-non-agriculturists/article32703574.ece> accessed 19 October 2020.

These three Acts when viewed together give us an insight into the direction in which the agricultural sector is headed – Privatisation, liberalisation and globalisation finally in the year of 2020.  

We will see the rise of contract farming, large scale investment both foreign and local, improvement in technology, better standards, hopefully no more corruption or politics and hopefully transparency and ease of doing business for both investors and farmers especially.

Having said that, it is by no means a stretch to say that the farmers who were already suffering due to the corruption of the Mandis and debt, will find a new challenge, one which on the face of it seems promising but can be harder to meet expectations of private investors both foreign and local. It is also indicative of almost nudge in the direction of accepting the compensation award granted by the government for their land.  It seems as if the Farmers Act, the older LARR and the newer Karnataka Land Reforms Act, can be interpreted as an ultimatum to the farmers – ‘Keep up and keep your land’. The previous statement I hope is but my own pessimistic projection and not a premonition for this Brave New World, the backbone of our economy is about to enter.


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