Ordinances are laws that are promulgated by the President of India on the recommendation of the Union Cabinet, which will have the same effect as an Act of Parliament. They can only be issued when Parliament is not in session. They enable the Indian government to take immediate legislative action.

Recently, the Union government passed three bills to replace the three ordinances that were enacted during the COVID-19 lockdown. For more than four decades, more farmers are not able to recover even the basic cost of cultivation from their farms. The overall fiscal commitment to agriculture is drastically curtailed. The investments in the sector are at a standstill, and if one applies the factor of inflation, then these would stand in the negative.

Purpose of the Bills:
To bring revolutionary changes to agrarian context and help double farmers’ incomes

These three bills are: 
1.    The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020. 
2.    The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 
3.    The Essential Commodities (Amendment) Bill, 2020.

Historical background of the status of farmers in India:

 Another striking feature of India’s agriculture is the continuing trend of increase in the numbers of small holdings in the country. The first agricultural census done in the beginning of the 1970s reported that figure at 71 million. In the last five decades, those numbers have grown exponentially from 138 million in 2010-11 to 146 million in 2015-16, as per provisional estimates of agriculture census 2015-16.

1.    As per Census 2011, 96 million cultivators enumerated farming as their main occupation, down from 103 million in 2001 and 110 million in 1991. 
2.    Still 46% of the workforce is working full-time in farmlands. 
3.    The size of the operational holdings for small and marginal farmers has shrunk from 1.15 hectares in 2010-11 to 1.08 hectares in 2015-16, according to provisional estimates of the 10th agriculture census 2015-16, and small and marginal holdings constitute almost 90% of our total agricultural land holdings.
In other words, the average size of operational holdings has considerably reduced from 2.28 hectares in 1970-71 to 1.15 hectares in 2010-11, and 1.08 in 2015-16, shows data.

What is more worrying is the fact that the top 10% of the households are now cultivating almost 50% of India’s total cultivable lands whereas the bottom 50% are cultivating less than 0.5% of India’s cultivable lands. The decline in the India’s bottom 50% land holdings is steady. The table below is rather self-explanatory of the plight of the farming sector households.

Percentage of land cultivated by bottom 50% and top 10% of rural households

  1987–88 1993–94 1999–2000 2004–05 2009–10 2011–12
Bottom 50% 4.1 3.8 2.7 1.9 0.8 0.4
Top 10% 48.6 47.9 49.6 48.9 50.3 50.2


Low-income levels:

Given the state of holdings and the fact that two-thirds of them are in dry land farming areas of the country it is not surprising that the average income levels for the farming households and individuals are extremely low.

As per various estimates from governmental sources, the average income of a farming household stood at a mere Rs 8,931 per month in 2016-17. 

What is alarming is the fact that almost 35% of the income has come from the wages. There is little reason to believe that the above figures have changed. Overall, we can safely state that almost 85% of our farmers fall in the category of marginal and small farmers with less than two hectares of land holdings. It is against this crucial factor that we need to understand the legislations passed and the impact they might have on the very structure of our agrarian edifice.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill seeks to completely open up the sale of produce outside the Agricultural Produce Market Committees, or the APMCs. It not only creates an e-highway for trading and transactions, but also creates a structure for e-trading of agriculture produce. Farmers are allowed to sell their produce outside of the APMCs, and that creates a possibility for more competition and better pricing for farmers. In other words, the market is thrown completely open for the private players to come in the agriculture sector and deal directly with the farmers.

About the bills:
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill creates a framework for contract farming. It provides a template at the national level of farming agreements, with regard to agribusiness, processing, and the entire range of services including wholesalers, exporters and large retailers for sale of farming produce at a mutually pre-agreed price.

The Essential Commodities (Amendment) Bill takes away cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities. Therefore, these commodities are now free of the Essential Commodities Act restrictions and stand deregulated. However, the central government has retained the right to regulate them under extraordinary circumstances, such as in case of a war, famine, natural calamity, and impose stock limits if there is a steep rise in prices.

Immediate impact: 
Put together, this package of legislations seeks to open up the farming at both ends – production (through contract farming) and sale (through complete deregulation). So, what are the implications of such an act?

Farmers are debt ridden, starved of funding and of assured price mechanism. The three legislations if taken together accentuate the crisis even further. In the absence of a guaranteed support price mechanism, the legislations even fail to mention a very strong support for the MSP as a benchmark price as a fundamental condition for open agriculture trade and winding up of mandis.

For years farmers have demanded statutory support price for their produce from the government. The question is what is the base level of that income that will be taken for it to double and to what?

We need to understand that if the country has to come out of her grave economic crisis, the answer does not lie in the economies of the urban or of the extractive economies of the capital. The answer decisively lies in the revival of the rural with dignity and respect. The country, it must be understood, cannot survive if the rural falls and chances of such an event happening today can only be averted with a considered policy response initiated with empathy and care

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  • sunil

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    Very well explained. Thank you.