What Were The Three Farm Laws And Why Were They Repealed?

Published By : Admin | April 2, 2024 | 18:48 IST

In September 2020, three bills were introduced into the Lok Sabha with the intent to remove leakages, corruption, and middlemen in agricultural procurement and for the welfare of the millions of peasants of the country.

The first was 'The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020. This bill focused on allowing the farmers the freedom to sell anywhere to anyone.

The second was 'The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020'. This bill focused on aiding the farmers with small and marginal landholdings, immune them from market unpredictability, and enabling them to access modern technology indispensable to farming. Dispute resolution was also a part of this bill.

The third bill was 'The Essential Commodities (Amendment) Bill 2020'. This bill was more about regulating and easing the private sector's trade and other operations concerns.

The bills for the agricultural sector were equivalent to the Liberalisation, Privatisation, and Globalisation reforms of 1991. During the pandemic, the government intended to free farmers from the clutches of the middlemen and allow them more freedom when it came to selling their produce. The most important objective here was increasing the farmers' income. The income disparity between agricultural and non-agricultural workers was only growing, so enabling them to access the private sector option was important.

Another objective was to balance the mismatch in supply and demand within the Indian market. Put simply, the country was incurring mammoth import bills for commodities that could be easily grown in India, like edible oil, pulses, and even fruits and vegetables, because of a lack of crop diversification. However, there was an excess supply of other crops and commodities that used to rot in warehouses year after year. There was a significant mismatch between agricultural produce and consumer demand in the country, as it reflected what India used to produce and consume used to demand in the 1960s. Since then, the consumer food basket has changed significantly.

The third objective was to boost India's exports. In 2019, India's share in global agricultural exports was around 3 per cent. In comparison, China's share was 5.4 per cent, Brazil's share was 7.8 per cent, the United States of America had a share of 13.8 per cent, and the European Union led the world with a share of 16.1 per cent.

The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill 2020, or the FPTC Act, has several merits. For starters, it addressed the Agricultural Produce Market Committee (APMC) limitations. The problem for both the cultivators and buyers was that the notified agricultural commodities produced in the region under the jurisdiction of the APMC mandi could not be sold anywhere else. Further, the traders and buyers coming to these APMC mandis were required to have a licence, and they could not engage with the farmer directly. The commission agents, running the operations in the mandis, enjoyed a monopoly and often harassed both the buyer and the farmer to extract commissions.

However, the government was not doing away with the APMC mandis. It was merely giving a willing farmer an option to engage with a willing trader outside the purview of the commission agents and mediators. Transactions outside the APMC were not uncommon, but because they were not allowed, the buyer had the advantage when it came to negotiating a price.

The Farmers' Empowerment and Protection Agreement on Price Assurance and Farm Services Bill, or the Agreement on Price Assurance and Farm Services (APAFS), focussed on farming contracts.

Before these bills, twenty states in India already had a contract farming law in place. However, with APAFS, the government's vision was to put in place a common national law in the spirit of a one-nation-one-market and facilitate ease of doing business for farmers. Interestingly, it was Punjab where contract farming began, though without much success, in 1988 when PepsiCo collaborated with farmers to produce fruits and vegetables. Dairy farmers were already working with big and small private companies in Punjab. For instance, over 100,000 dairy farmers have been contracted with Nestle, and the company has been operating successfully for over six decades since 1961. The bill had several safeguards for the farmers to check against private-sector exploitation.

As per the bill, signing the contract agreement before production began was mandatory. It was in place to clarify the time of supply, quality, grade, standards, price, and any other relevant aspects to the farmer. The contract duration was fixed between one crop cycle and five years, allowing the farmers to exit early, if required, or enter into a long-term working relationship with the companies.

On the pricing front, the act prioritised the farmer's interests in case of fluctuations. The act had provisions for farmers to be paid a guaranteed amount if the market price went down. However, if the market price went up, the buyer would be required to pay a bonus or a premium directly proportional to the prevailing price in the APMC mandis, any electronic trading platform, or any other benchmark mutually agreed upon by the buyer and the farmer.

The Essential Commodities (Amendment) Bill addressed the uncertainty around government intervention when it came to agricultural and food commodities. The amendment to the act stated that the government could regulate the supply of the notified commodities only under extraordinary circumstances, including war, famine, uncontrolled inflation, or any other natural calamity. A hundred per cent increase in the retail price of the produce or a 50 per cent increase in the retail price of non-perishable agricultural produce over a price prevailing in the last twelve months or an average of the last five years, whichever is lower, was proposed in the bill.

While the act did not dilute the power of the government to aid the cause of the citizens, who often suffer due to high prices, it did give the operating companies more clarity, easing their planning and management.

The introduction of the laws resulted in elaborate discussions between the Centre and a few farm unions. Factoring in the feedback from the farm unions, the government was negotiating in good faith and even willing to tweak the laws to further help the farmers enhance their opportunities and incomes. However, the farm unions were unconvinced and unable to overcome their doubts. Eventually, the government, withdrew the existing laws in 2021.

Amid agitation and taking view of the farmer's demand, Prime Minister Narendra Modi announced the decision to withdraw the farm bills. However, the government has been working on various reforms and programmes for the farmers. The fertiliser subsidy, for instance, has increased fourfold to Rs. 2.5 Lakh Crore in 2022-23 from 2017-18, reducing the input costs for the farmers. Further, FPOs nationwide have been facilitated with easy access to credit, eNAM, and better logistics facilities. As of 2024, more than 90 per cent of India's agricultural trade is moving through contracts agreed upon between the farmers and their buyers, especially in the horticulture and dairy sectors.


Explore More
No ifs and buts in anybody's mind about India’s capabilities: PM Modi on 77th Independence Day at Red Fort

Popular Speeches

No ifs and buts in anybody's mind about India’s capabilities: PM Modi on 77th Independence Day at Red Fort
Make in India: Google to manufacture drones in Tamil Nadu, may export it to US, Australia, others

Media Coverage

Make in India: Google to manufacture drones in Tamil Nadu, may export it to US, Australia, others
NM on the go

Nm on the go

Always be the first to hear from the PM. Get the App Now!
PM Modi’s Vision Fuels Delhi’s Development
April 12, 2024

“Delhi has the good fortune to get an opportunity of keeping the flag of nations' prestige flying high.”
- PM Narendra Modi as Delhi prepared to host the G20 Summit

The last ten years of Prime Minister Narendra Modi’s government have set in motion the creation of a New India—from rural to urban, from water to electricity, from houses to health, from education to employment, from castes to classes—a comprehensive plan bringing growth and prosperity to each doorstep.

The National Capital Territory of Delhi has emerged as a pivotal part of this dynamic developmental momentum spearheaded by PM Modi throughout this transformative decade.

The city has been at the heart of the infrastructural shift that has given a dedicated facelift to the entire nation. Today infrastructural marvels like Atal Setu, Chenab Bridge, Statue of Unity, and Zojila Tunnel dot India’s ever-evolving landscape.

With its focus on revamping transportation networks, upgrading urban amenities, and expanding digital infrastructure, the Modi government has launched an array of transformative initiatives. From railways, highways to airports, these initiatives have been key in galvanising inclusive and sustainable development across the length and breadth of the country.

The impressive expansion of the metro rail network has revolutionised urban commuting in India. From a mere 5 cities in 2014, the metro rail network now serves 21 cities across the nation—expanding from 248 km in 2014 to 945 km by 2024, with 919 km of lines under construction in 26 additional cities.

The Union Cabinet has recently approved two new corridors of Delhi Metro Phase-IV—Lajpat Nagar to Saket G-Block and Inderlok to Indraprastha. Both the lines have a combined length of over 20 kms with a project cost of over Rs. 8,000 crore (funding being sourced from the Union Govt, Govt of Delhi, and international agencies). The Inderlok- Indraprastha line will play a significant role in enhancing connectivity to the Bahadurgarh region of Haryana. Additionally, India’s first Namo Bharat train, operating on the Delhi-Meerut Regional Rapid Transit System (RRTS) corridor further underlines the Modi government’s commitment to enhancing regional connectivity and upgrading its transportation infrastructure.

Further, the Bharatmala Pariyojana envisages improved logistics efficiency and connectivity via the development of nearly 35,000 km of National Highway corridors. 25 greenfield high-speed corridors have been planned under the plan out of which four intersect with Delhi’s growing infra capacity: Delhi-Mumbai Expressway, Delhi-Amritsar-Katra Expressway, Delhi-Saharanpur-Dehradun Expressway, and the Urban Extension Road-II. The total project length sanctioned for Delhi is 203 km with an allocation of over Rs. 18,000 crore.

Over the past decade, the Modi government has consistently dedicated efforts towards augmenting capacity and decongestion of airports. After the IGI Airport Delhi became the first airport in the country to have four runways and an elevated taxiway, the expanded state-of-the-art Terminal 1 has also been inaugurated recently. In addition, the upcoming Noida International Airport (Jewar) shall further contribute to decongestion of the Delhi airport which is serving millions of passengers annually.

Besides, the inauguration of the New Parliament has further added civilisational yet modern connotations to the city’s landscape. Inauguration of the Yashobhoomi (India International Convention & Expo Centre) has given Delhi India’s largest convention and exhibition centre, offering a mixed purpose tourism experience. Along with Yashobhoomi, the Bharat Mandapam, a world-class convention and exhibition centre, showcases India to the world.

In terms of welfare, the Modi government has launched several schemes benefitting people hitherto on the margins of growth and development. Women’s safety in Delhi has been a key concern. To address the same, the Modi government strengthened the Criminal Law (Amendment) Act, 2013 by increasing the quantum of punishment for rape, including capital punishment for rape of a girlchild below the age of 12.

The Union Home Ministry established a separate Women Safety Division back in 2018. One-stop centers, Sakhi Niwas, Safe City Project, Nirbhaya Fund, SHe-Box, Investigation Tracking System for Sexual Offences, and Cri-MAC (Crime Multi-Agency Center) among others are significant additions in the government’s campaign towards women safety.

In addition, Swachh Bharat Mission, PM Ujjwala Yojana, PM Matru Vandana Yojana, and Beti Bachao Beti Padhao have further led to the empowerment of Nari Shakti in India.

As India becomes the 3rd largest startup ecosystem in the world, Delhi is also contributing significantly towards this development. Today over 13,000 DPIIT-recognised startups are functioning in Delhi even as the government is promoting self-employment through PM MUDRA Yojana with over 2.3 lakh loans sanctioned worth over Rs. 3,000 crore for FY2023-24 (as on 26.01.2024).

PM SVANidhi, which provides collateral free loans to street vendors, is supporting over 1.67 lakh beneficiaries in Delhi. Further, under the Aatmanirbhar Bharat Rozgar Yojana, launched in 2020 to incentivise employers for creation of new employment and restoration of loss of employment during Covid-19 pandemic, over 2.2 lakh employees benefitted in Delhi.

Further, nearly 30,000 houses have been sanctioned and completed in Delhi under PM Awas Yojana (Urban).

Air pollution has been a recurring problem for the people of Delhi. Conscious of this reality, the central government has launched the National Clean Air Programme as a national level strategy to reduce air pollution level across the country.

The Modi government's tenure over the last decade has brought about a remarkable transformation in Delhi across various fronts. From infrastructure development to governance reforms, from education to employment, the government's initiatives have left an indelible mark on the capital city. As Delhi continues on its journey of progress and development, the contributions of the Modi government are set to shape its future trajectory for years to come.