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."