Punjab Assembly clears farm Bills to negate Centre's latest laws

Punjab Chief Minister Captain Amarinder Singh during the second day of the Special Vidhan Sabha Session in Chandigarh, on Tuesday Photo: PTI
The Punjab Assembly on Tuesday unanimously passed a bunch of legislation seeking to penalise anyone who compels a farmer to sell wheat and paddy below the minimum support price (MSP) in the state and also entrust itself with powers to levy taxes on all out-of-mandi transactions. The move is aimed at nullifying a portion of the three recently enacted central farm Acts, besides safeguarding the state's financial interests. 

The Assembly passed the amendments to each of the three central laws to bring them in line with the provisions of the state’s own APMC Act of 1961, thereby establishing its supremacy over the central laws.   The House also adopted a resolution rejecting the Centre's new farm laws.

Regarding the changes mooted to the trade facilitation Act and also the contract farming Act, the penal provision of a jail term up to three years for compelling farmers to sell their produce below the MSP is primarily meant for wheat and paddy; the central government declared MSP for almost 22 crops and many of them, such as cotton and maize, have been sold below the MSP in the state.

In Punjab, contract farming is seldom done for paddy and wheat. Hence, it is not clear what will be the MSP provision do. The new laws also empower the Punjab government to levy tax, charge or fee on all out-of-mandi transactions in the "trade area" as defined by the mother Central law.

Experts said Punjab's move is clearly meant to ensure the Food Corporation of India (FCI) continues to pay the mandi fees of almost 8.5 per cent on all wheat and paddy purchases made in the state.

Punjab, according to some estimate, earns around Rs 5,000 crore annually from such purchases.

In the case of the amendments to the Essential Commodities Act, Punjab's proposed Acts said that state will have powers to impose stock limits under exceptional circumstances, along with the central government as stated in the central legislation.

The Bills passed by the Punjab Assembly say that in addition to the remedies available to farmers according to the central legislation which are through mitigation by a panel formed by the Sub-Divisional Magistrate (SDM), an aggrieved farmer can approach the civil court for remedies.

The central Acts clearly state that in case of a dispute under the trade facilitation Act or the contract Act, if the aggrieved party is not satisfied with the order by the sub-divisional magistrate (SDM), or the mechanism established by him/her, the person can’t challenge the same in any court.

Several experts and farmer groups have strongly criticised this "convoluted" dispute settlement mechanism, claiming it — especially in the context of the contract farming Act — gives undue advantage to big corporates and businesses and takes away rights of small farmers to appeal in court. 

Noted constitutional expert Subhash Kashyap dubbed the proposed state legislation "completely illegal and unconstitutional". “A state can frame legislation only on items that fall under the State List. States do not have powers to comment or disobey any legislation (which in this case are the three central Acts) which has been framed under the Concurrent List,” Kashyap told Business Standard.

Kashyap said that he hopes that the governor and the President do not give ascent to the Punjab Bills as they are illegal. “To me, this is more a political move than legal or constitutional,” he said. Sukhpal Singh, chairperson for Centre for Management in Agriculture (CMA) in IIM-Ahmedabad, said: “I think the Bills passed by the Punjab Assembly takes a very narrow view of the items covered under MSP as they include just wheat and rice. It is a clear attempt to protect the annual procurement mechanism by the FCI and protect the state's financial interests."

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel