Trending: Call for Papers Volume 4 | Issue 4: International Journal of Advanced Legal Research [ISSN: 2582-7340]

New Farm Bills: From Auction to Privatization


In an agricultural economy, Farmers are economy runner; government makes Policies taking into account suitability of the farmers. Farming is a remarkable and indivisible part of the economy in India, as it constitutes 19% of the total GDP. It also contributes in providing employment opportunities to 60% of the population[i], so the farmers are the backbone of Indian economy and also they are an important part of the existence as they provide food and fabric to the nation. We refer Farmers as ‘Anndata’ as they provide us food and fruit which are basic essentials of human life without which a common man cannot survive. Rural India which is highly dependent on agriculture need to be taken care of , farmers in India constitute a huge vote bank to government , so it becomes more important to look into the problems and needs of Farmers for any government . 

Now here this article will throw light on new farmers bill , this article will also deal with the theory If parliament can make laws on agriculture , pros and cons of New bills , how will farmer get affected , is really government taking the farmers view into consideration ? 

New Farm Bills

There are three bills which have been passed recently in the parliament. First is The Farmer’s Produce trade and Commerce (Promotion and Facilitation) Bill, 2020, prior to this bill there was a condition that farmers from a particular area can sell their commodities to notified Agricultural Produce Market Committee (APMC) mandis where they had to pay certain state tax and nominal fee, now under this bill provision has been made under which farmers now can sell their commodities outside the premises of APMC also without paying any short of state taxes and fee. Second is The Farmer’s (Empowerment and protection) Agreement on price assurance and Farm Services Bill, 2020, prior to this bill there was auction based system where state government had the power to decide MSP I.e. Minimum Support Price below which auction cannot be conducted, now under this bill provision has been made under which there will be direct marketing and contract farming will takes place. Third is The Essential Commodities (Amendment) Bill,2020, prior to this bill there was exception granted to few important commodities against hoarding , now under this new amendment bill,2020 provision has been made under which there will be no bar over hoarding , production, storage , movement and sale of few main foodstuffs which includes onion, pulses , cereals, edible oils ,etc. given that except in emergency situations and extraordinary conditions and circumstances[ii].

Parliament vs. State over agriculture as a subject matter 

We have been provided three lists in schedule 7 of Indian constitution, in list 1 contains 97 entries[iii] under which union government can make laws, list 2 contains 66 entries under which any state government can make laws, list 3 is concurrent list which contains 47 entries under which both the state and central government can make laws. Now with respect to agriculture as far as union list i.e. list 1 is concern ,under entry 86 it has been provided that parliament can make laws against the taxes on the capital value of the assets which excludes agricultural land which means central government has no power to collect tax on agricultural land , Under entry 87 , power has been granted to parliament over Estate duty in respect of property other than agricultural land , Under entry 82 , exemption of tax has been granted on agricultural income , so parliament can make laws on Taxes on income other than agricultural income. By referring above entries it can be said that no exclusive power related to agriculture has been granted to parliament to make laws or regulate the provisions. On the contrary if we see state list , under entry 14 power has been granted to state government to make laws on agriculture , including agricultural education and research , for the protection of pest and plant diseases, Under entry 30 of state list power has been granted to state government to provide for relief from agricultural indebtedness to farmers , Under entry 46 of state list , power to collect tax on agriculture has been vested with state government, whereas under entries 47 and 48 of state list , power to make laws on duties in respect of succession to agricultural land, and estate duty in respect of agricultural land has been granted to state government. As far as concurrent list is concern, under entry 6 , both centre as well as state can make laws on transfer of property other than agricultural land , so here it can be inferred that centre has been debarked from making laws in any matter of agriculture. Under entry 7 of concurrent list, power have been granted to make laws to both parliament and state in matter of contracts, including Partnership, agency , contracts of carriage but not including contracts relating to agricultural land . Now it becomes more important to differentiate between the margin line of trade and occupation and we need to understand both are different, various courts have interpreted that agriculture is an occupation in the same way as education, it is not trade, trade is selling and purchasing of commodities and an occupation relates to production of commodity, so farming is an occupation[iv].

Pros and cons of New farm Bill

As far as advantages of New farm Bill are concern, it can be inferred that –
Farmers now can sell their commodities outside their mandis and there will be no state tax levied upon the farmers. In the existing APMC system, it is mandatory for farmers to go through a trader so as to sell their produce. It was this very system that has influenced the rise to a cartel led by traders and uncompetitive market due to which farmers are paid MSP (a very low price) for their produces. Farmers will get an opportunity to look out for best dealer in the market. These bills will provide farmers freedom to trade across states and will empower them to turn into traders and regulate their own produce. There will be freedom of choice of sale and purchase of agricultural commodities between the two parties and it will promote intrastate trade without any barrier. No barricading in farming sector will help both the farmers, as well as consumers, in case of any emergency situations like flood, drought or any other natural calamities, food carriage will be more efficient and purpose of national interest will also get serve.

As far as disadvantages of New farm Bills are concern, it can be inferred that-

These bills does not contain any provision for Minimum support price (MSP) for farmers in which case farmers can be assaulted by capitalist, farmer will be treated as commodity in years to come, as government declares MSP for certain important crops ,but in absence of the provisions regarding MSP, farmers will be at back foot . State like Punjab and Haryana will not get any state tax on agriculture which constitutes 8.5% in Punjab and 6% in Haryana, so loss of revenue can be a major disadvantage for any state government for further development and growth. With no MSP, market price can fall and we all know in capitalist economy, one party to business dominates other in terms of profit, as maximum profit is the ultimate aim, state like Punjab which charges 6% mandi tax and collects total revenue near 3400 crore form these charges, and Punjab and Haryana are important from the fact that 75% wheat production has been done in these two states only[v].


Focus has been laid down on privatization of farming, where every farmer rich or poor will be a party to a contract and there will be terms and conditions as well. Capitalist will try to buy best quality crops cheaply, whereas farmers will try to sell their commodities at good price, so it will be a tug of war between farmers and Capitalists. Author argues if government want to aid the farmers of the country they should provide relief in indebtedness of farmers, there should be a proper guarantee scheme and statutory backing to the minimum selling prices and procurement, hoarding must be under scrutiny and thereby author believes amendment in Essential commodities Act could bring large corporate goons into agriculture space and this can lead to harmonization of agricultural market and also Constitution have granted rights to state to make laws over agriculture, so Parliament should reconsider the state government will , otherwise it will be against the spirit of Constitution and Courts should follow the doctrine of Pitts and substance and look over these bills from major perspective and which will serve the interest of farmers for better because they are exercising there right to life to protect the right to life and personal liberty of the people of the country by providing food . 

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Author: Harsh Gupta, Hamdard Institute Of Legal Studies And Research, Jamia Hamdard University. 

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