Examine the political and economic ramifications of the recent farm law’ repeal.
- The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, which is aimed at allowing trade in agricultural produce outside the existing APMC (Agricultural Produce Market Committee) mandis;
- The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, which seeks to provide a framework for contract farming;
- The Essential Commodities (Amendment) Act, 2020, which is aimed at removing commodities such as cereals, pulses, oilseeds, edible oils, onion and potato from the list of essential commodities.
The need for these reforms
- There has been a long-pending demand for reforms in agricultural marketing, a subject that comes under the purview of state governments.
- The Centre took the issue up in the early 2000s by pushing for reforms in the Agricultural Produce Market Committee (APMC) Acts of the states.
- The Agriculture Ministry under the then NDA government designed a model APMC Act in 2003 and circulated it among the states.
Implications of repeal
Impact on the economy
- The rate of agricultural expansion will remain constant: In the last seven years, agri-GDP has grown at a rate of 3.5 percent per year.
- This trend is expected to continue; slight fluctuations in agri-GDP may occur depending on rainfall patterns.
- Cropping patterns to stay skewed: Cropping patterns will remain skewed in favour of rice and wheat, with the Food Corporation of India’s granaries brimming with grain inventories.
- Food subsidy increases: The food subsidy will continue to inflate, with massive leakages.
- Environmental impact: The groundwater table in the northwest states will continue to recede, contaminating the environment with methane and nitrous oxide.
- Farmer leaders are already pushing for the legal assurance of MSPs for 23 agri-commodities, thus the demand for legal status for MSPs could grow. Their demand could expand to embrace a broader range of goods.
- Demand for privatisation: There may be pressure to stymie privatisation reforms of public sector firms — such as Air India — or any other reform for that matter.
- As a result, economic reforms that are sorely required to boost growth are likely to be slowed.
- Protests can be asked to call off and normalcy can be regained
- Any unwanted influence of fringe elements can be avoided
- The method of legislating through ordinances and not referring to parliamentary committees for scrutiny may come down
- Centre state relations can turn sour
Economic reforms must be more consultative, transparent, and communicated to potential beneficiaries. This inclusiveness is at the very heart of India’s democratic functioning.
How to structure:
- Give an introduction about the farm laws
- Give both the political and economic implications of the repeal – give both sides of the argument
- Suggest way forward
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