Explained: The Constitutional Validity of Farm Bills 2020

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The bills are the Farmers’ Produce Trade and Commerce Bill, 2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, and Essential Commodities (Amendment) Bill 2020. The bills had passed into acts on 27th September 2020 after approval from the President.

Introduction 

India is an agrarian country. Farming and agriculture form an important part of the backbone of the Indian economy. The farm reform bills 2020 are a set of three bills that have become acts within the Indian Parliament. The bills are the Farmers’ Produce Trade and Commerce Bill, 2020, Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020, and Essential Commodities (Amendment) Bill 2020. The bills had passed into acts on 27th September 2020 after approval from the President. The bills have become a subject of discussion within the country, sprawling many debates.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 is the first act in this series of acts. It allows farmers to trade in areas that are away from the ambit of the APMC (Agricultural Produce Market Committee). The areas where they have power as known as yards or mandis. Farms, factory areas, and grain storing silos are examples of such areas. Farmers will now be able to trade online through electronic trading platforms. Companies that have registered in the Income Tax Act, 1991 will be able to engage in trade with the farmers. Farming societies and agricultural organizations will also be able to trade with farmers. State governments are also forbidden to keep any cess tax on farmers trading. The same applies to electronic platforms facilitating such trade. 

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 is the second act in this series of acts. It helps in the formation of contract farming which will involve the farmer and the buyer only. The period of the contract will be dependent on the production cycle of the crops. The contract must include the pricing process between the farmer and the buyer. Extra pricing charges must also come under the contract. The act also ensures the setting up of a dispute system involving a (Conciliation Board, Sub-Divisional Magistrate, and Appellate Authority). This system will deal with any disputes arising in this sector. 

The Essential Commodities (Amendment) Act, 2020 is the third act in this series of acts. The act allows the central government to delist certain items as essential. This will allow Parliament to regulate the supply of such delisted items in extraordinary times. Extraordinary situations include war, famine, extraordinary price rises, or natural calamities. Stock limits on a certain commodity are now linked to the rise in price. 

The Constitutionality of the Acts  

The Acts have fallen under criticism and became controversial due to a lot of reasons. Existing APMC controlled yards or mandis do not fall under the ambit of a trading platform. Hence the legislation has limited the role of the state government in the agricultural trade practices of the country. Furthermore, the de-regulation of essential commodities strips the power from the state government to legislate on these matters. 

Cooperative Federalism is a concept that has been enshrined within our constitution and has been cemented by the nine-judge bench decision in the S.R. Bommai v. Union on India wherein federalism was interpreted to be a part of the basic structure of the constitution. This means that the Central and State government will have separate powers, and neither can interfere with the powers of the other. In this case, the federal structure of the Indian governing system was strengthened. The State had more freedom from the Centre to govern its affairs.

Cooperative Federalism is a concept upon which our constitution rests and is cemented by the nine-judge bench decision in the S.R. Bommai v. Union on India case where the concept of federalism was deemed to be part of the basic structure of the Indian Constitution. 

Agriculture has been excluded from the ambit of the Union List. Thus, the authority of Parliament to legislate on this matter has severely shrunk. Entries 18, 28, and 46 grant the power to legislate on agricultural matters to the respective state governments. An argument can arise that Entry 33 of the Concurrent list allows Parliament to make laws here. But the Entry restricts Parliament from moving out of the sphere of trade and commerce into other matters. The taxation of agricultural products/lands remains a state subject. Thus, the intrusion of Parliament on this subject is not warranted. Furthermore, the trading areas mentioned in the Farmers Produce Trade and Commerce Act does not elaborate upon its definition of a trade area and how it falls out of the power of the State legislature. Markets are essentially trade areas as a wide variety of trading and commercial activities happen within markets, and it is a recognized term in Section 2 of the Competition Act, 2002.

Conclusion 

The relationship between the Centre and State is an important one. It needs proper care to ensure the smooth functioning of the government. Encroachment of powers by both sides upon each other will cause a domino effect. This can tear apart the very fabric of the nation. The idea of co-operative federalism is imperative to democracy in India. The Supreme Court has accepted the PIL given by Rakesh Vaishnav and has sought a reply from the Centre. The outcome of the PIL will be a key factor in determining the future of the Indian farming community. The future relationship between the State and the Centre will also rest in the decision made by the judges in this case.


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