General Studies- 2
Government policies and interventions for development in various sectors and issues arising out of their design and implementation
- Concerns about Farm bills
- Can States amend central laws and is Centre Empowered to make law on state subject?
- How the centre did made a law on subject in state list?
- What do the aggrieved states will have to do to nullify farm laws made by centre?
Economic Development and Planning
- Loan interest waiver to be credited
1) Concerns about 3 Farm bills:
Why in news?
- As a reaction to 3 farm bills passed in parliament, Punjab Vidhan Sabha to nullify the bills introduced its own 3 farm bills.
- States aggrieved by central farm laws are adopting both legislative and legal measures
- Punjab Government’s efforts to enact State amendments to override the effects of the Centre’s new agriculture laws epitomise the difficulties in managing the conflict between liberalising the farm sector and protecting the small and marginal farmer from the agonies of the transition.
- Punjab has been the hub of the opposition to the Centre’s legislative exercise to change the basics of trade and commerce in agriculture.
- Punjab argues that the central Acts would cause “grave detriment and prejudice” to agricultural communities.
- The Bills cite an agriculture census of 2015-16 to argue that 86.2% of farmers own less than five acres — a majority of them less than two acres — and that with limited or no access to multiple markets,
- They would be handicapped while negotiating fair price contracts with private players.
- Making efforts to buy farm produce at less than the MSP or harassing farmers in a bid to persuade them to enter into such contracts have been sought to be made punishable offences, with a jail term of at least three years.
- The Bills also seek to overturn the Centre’s move to remove the fee on trade and transactions that take place outside markets functioning under APMCs.
- A key issue raised by Punjab’s proposed amendments is whether they are legally valid and where they stand in the teeth of the Centre’s legislation.
Can states amend Central laws and is centre empowered to make law on state subject?
- States can indeed amend central laws enacted under the Concurrent List, subject to the condition that provisions repugnant to the parliamentary Acts will have to get the President’s assent, without which they do not come into force.
- The Punjab Bills note that agriculture is under the legislative domain on the States, as the subject falls under the State List in the Seventh Schedule.
How the centre did made a law on subject in state list?
- The Centre has enacted its farm sector Bills by invoking Entry 33(b) in the Concurrent List, which concerns trade and commerce in, and production, supply and distribution of, “foodstuffs”.
- By stretching the entry’s meaning to include agriculture, Parliament has managed to pass laws in the domain of the States.
What do the aggrieved states will have to do to nullify farm laws made by centre?
- In these circumstances, States aggrieved by the farm sector laws will either have to go the Punjab way to adopt Bills that would require presidential assent
- Rajasthan has decided to do, or challenge the validity of the central laws in the Supreme Court,
- Chhattisgarh is said to be considering the same
Whatever the outcome clears from the groundswell of opposition across the country is that a cavalier and centralised approach to issues that affect millions of farmers’ ill-serves a diverse country.
What are the Farm bills and provisions?
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020
Main provisions –
- The new legislation will create an ecosystem where the farmers and traders will enjoy freedom of choice of sale and purchase of agri-produce.
- It will also promote barrier-free inter-state and intra-state trade and commerce outside the physical premises of markets notified under State Agricultural Produce marketing legislations.
- The farmers will not be charged any cess or levy for sale of their produce and will not have to bear transport costs.
- The Bill also proposes an electronic trading in transaction platform for ensuring a seamless trade electronically.
- In addition to mandis, freedom to do trading at farm gate, cold storage, warehouse, processing units etc.
- Farmers will be able to engage in direct marketing thereby eliminating intermediaries resulting in full realization of price.
- Procurement at Minimum Support Price will stop
- If farm produce is sold outside APMC mandis, these will stop functioning
- What will be the future of government electronic trading portal like e-NAM
- Procurement at Minimum Support Price will continue, farmers can sell their produce at MSP rates,
- Mandis will not stop functioning, trading will continue here as before.
- Under the new system, farmers will have the option to sell their produce at other places in addition to the mandis
- The e-NAM trading system will also continue in the mandis
- Trading in farm produce will increase on electronic platforms. It will result in greater transparency and time saving
The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020
Main provisions –
- The new legislation will empower farmers for engaging with processors, wholesalers, aggregators, wholesalers, large retailers, exporters etc., on a level playing field.
- Price assurance to farmers even before sowing of crops. In case of higher market price, farmers will be entitled to this price over and above the minimum price.
- It will transfer the risk of market unpredictability from the farmer to the sponsor. Due to prior price determination, farmers will be shielded from the rise and fall of market prices.
- It will also enable the farmer to access modern technology, better seed and other inputs.
- It will reduce cost of marketing and improve income of farmers.
- Effective dispute resolution mechanism has been provided for with clear time lines for redressal.
- Impetus to research and new technology in agriculture sector.
- Under contract farming, farmers will be under pressure and they will not be able to determine prices
- How will small farmers be able to practice contract farming, sponsors will shy away from them
- The new system will be a problem for farmers
- In case of dispute, big companies will be at an advantage
- The farmer will have full power in the contract to fix a sale price of his choice for the produce. They will receive payment within maximum 3 days.
- 10000 Farmer Producer organizations are being formed throughout the country. These FPOs will bring together small farmers and work to ensure remunerative pricing for farm produce
- After signing contract, farmer will not have seek out traders. The purchasing consumer will pick up the produce directly from the farm
- In case of dispute, there will be no need to go to court repeatedly. There will be local dispute redressal mechanism.
7th Schedule of Indian Constitution-
The constitutional provisions in India on the subject of distribution of legislative powers between the Union and the States are defined under several articles
The Seventh Schedule to the Constitution of India defines and specifies allocation of powers and functions between Union & States.
It contains three lists; i.e. 1) Union List, 2) State List and 3) Concurrent List
- The legislative section is divided into three lists: the Union List, State List and Concurrent List.
- Unlike the federal governments of the United States, Switzerland or Australia, residual powers remain with the Union Government, as with the Canadian federal government.
- The Union List or List-I is a list of 98 numbered items (after 101st Constitutional amendment act 2016, entry 92 and 92c removed) (the last item is numbered 97) given in Seventh Schedule in the Constitution of India on which Parliament has exclusive power to legislate.
- The State List is a list of 59 (Originally 66) items in the Schedule Seven to the Constitution of India.
- The respective state governments have exclusive power to legislate on matters relating to these items.
- There are 52 (Originally 47) items currently in the list: This includes items which are under joint domain of the Union as well as the respective States
2) Loan interest waiver to be credited:
Why in news?
Three weeks after informing the Supreme Court that the Centre would bear the additional compound interest on loans of up to 2 crore availed by retail borrowers as well as micro, small and medium enterprises (MSMEs), the government formally communicated the modalities of the scheme to lenders on Friday.
- Banks and other lenders, including co-operative banks and non-banking finance companies, have been asked to credit the difference between the compound interest and simple interest for the six month period between March 1 and August 31 into these loan accounts by November 5.
- This would be implemented even for borrowers who had not availed the moratorium on loan repayments allowed by the Reserve Bank of India (RBI) up to August 31.
- At its last hearing on October 14, the Supreme Court had turned down the Centre’s request for a month to implement a scheme to ensure that borrowers with loans of up to 2 crore won’t have to bear compound interest on the interest dues accruing on their loans during the moratorium period.
- The apex court, which had been hearing petitions seeking an extension of the six month moratorium granted by the RBI on loan repayments, had given the Centre time
- Credit card dues have also been included in the scheme’s ambit.
- However, this would only be permitted for loan accounts that had not been reported as non-performing assets.
- A loan is recorded as a non-performing asset or NPA; 90 days after repayments become overdue.
- A mechanism has been put in place for banks to claim the amount back from the government, as per the missive sent on Friday to the RBI , National Bank for Agriculture and Rural Development (NABARD) and all other financing institutions.
- Lenders have to submit claims for reimbursement by December 15 through a special cell set up in the State Bank of India (SBI).
- Lenders have been asked to set up a grievance redressal mechanism for eligible borrowers under the scheme within a week, keeping in mind the guidance issued by the Indian Banks’ Association regarding the resolution framework for COVID-19 related stress.
- For resolving grievances of the lenders while implementing the scheme, the dedicated cell for the scheme in SBI will work in tandem with the Finance Ministry.