The government has reported well on the pandemic crisis, as it has made the long-awaited legislative changes to improve prices for farmers, but at the risk of resisting.
The amendments include amendments to the Law on Archaic Needs, the adoption of the Law on the elimination of inter-state barriers to the movement of agricultural products and the creation of a legal framework for a form of contract farming.
The Centre will have to wait until Parliament meets or gives orders in connection with the monsoon rains. Perhaps for the first time, the Centre has decided to introduce legislation allowing direct purchases from farmers outside the designated committees for the marketing of agricultural products (AMCs), thus limiting the role of the State in this trade.
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To this end, it has used its constitutional powers to regulate interstate and internal trade in the said goods in accordance with Article 42 of the Union list and Article 33 of the parallel list.
The legislation announced by EU Finance Minister Nirmala Sitaraman as part of the Atmanirbhar Bharat package will allow traders to buy agricultural products directly from farmers throughout the country, including outside regulated markets.
This would allow the start of unhindered trade between states and give a major boost to the government’s eNaM (Electronic National Agricultural Market) programme.
The electronic mechanism has not had the desired effect, as many legal acts of States did not allow for the free exchange between States of goods sold on the platform.
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The central legislation, together with the recent amendments to the APMC in the states of Madhya Pradesh, Uttar Pradesh, Gujarat and Karnataka, provide a framework for large retailers and companies to buy from farmers without going through a network of intermediaries. Recent state changes make it possible to establish private mandates, direct delivery by processors and a single state-wide operating licence.
Critics, however, argue that circumventing state power by invoking new constitutional provisions could create problems for the federal structure of the country, as it would limit state power only within Mandi’s borders.
Currently, CMPA certified mandate holders are obliged to sell certain products in their company or in their designated areas. The Centre has done what it has done in the Constitution to define any commercial activity that takes place outside the ACP countries as trade that can be centrally regulated by law, said Sukhpal Singh, Professor and President of the Centre for Agricultural Management, MIU-Ahmedabad, in an interview with Business Standard magazine.
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Reforms, he said, would be good if they led to higher prices for farmers, but denying states a role in trade outside established MATAs could create legal obstacles.
When you think of such important changes, where is the need to maintain agriculture as a state unit, Singh asked.
A senior government official stated that the mandates will continue to work as they do, but that the new legislation allows direct purchase by non-agents. The second important step in the reform announced by Sitaraman was the amendment of the Basic Goods Act (ECA) of 1954 to remove goods such as cereals, edible oils, oilseeds, pulses, onions and potatoes from its scope.
Measures such as stock limits are only permitted in exceptional circumstances such as national disasters and price increases, according to the Minister in her speech.
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Despite the fact that this law has been in force for many years, it has been whitewashed and there is little left under it. After this announcement, they will also leave.
The third reform is a kind of central law on contract farming that has the force of law in the states. There is a model law for contract farming, but few countries have fully implemented it.
Central legislation for contract farming had to be developed because the states did not apply this model law in the right direction, according to the senior civil servant.