Republic Day Special - Constitution Ignored - Farmers Exploited for 70 Years

 Republic Day Special for Farmers

For 70 years, Constitution Ignored - Farmers exploited

By:

Vijay SARDANA FICA, MIMA

PGDM (IIM, Ahmedabad), LLB, M.Sc. (Food Tech) (CFTRI), 

B.Sc. (Dairy Tech), PGD in Arbitration, Intl. Trade Laws & ADR

IPR (WIPO), Justice (Harvard), PhD (Circular Bio-Economy)(in progress)(JGU)

Advocate, Delhi High Court; Arbitrator, Negotiator & Mediator

Techno-Legal & Techno-Commercial Expert for Agri-Food-Consumer Businesses

Reading time: 8 to 10 min

The Constitution envisages all citizens are equal and must have the same freedom to decide their own professional, trade and commerce. Therefore, there is no mention of the word ‘farmer’ in the Constitution of India and because farmers must have similar freedom and equal opportunities. States cannot impose any restrictive laws and force them to operate only under APMCs. 

Many people are writing that Agriculture is a state subject therefore these laws are interference in state subject. This one of the biggest evidence that people are not only ignorant constitution but also ignorant about all the basic elements of economy i.e. law, science and trade. 

Let us first understand what the constitution says and whether these new agri-trade laws are within the constitutional framework or not?

Constitution Of India - Part XIII: Trade, Commerce and Intercourse within the Territory of India 

301. Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free. (Please note the APMC licencing system is against the spirit of these constitutional provisions)

302. Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest.  (Please note, this power is not given to the states)

303. (1) Notwithstanding anything in article 302, neither Parliament nor the Legislature of a State shall have the power to make any law giving or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule. (New Agri-trade laws are in line with these Constitutional provisions).

(2) Nothing in clause (1) shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. (The new laws are passed by the parliament to address this issue, states government and political parties must respect the Constitutional provisions.)

304. Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law— 

(a) impose on goods imported from other States [or the Union territories] any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; 

(b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President. (How many state APMC and state laws have approval from the Hon’ble President of India, this should be investigated.)

Hope this clarifies that new laws within the Constitutional provisions. Those who are raising confusion between agriculture and trade confusion between the production process and product. Agriculture is a production process and foodstuff is an output product. The production process can be controlled by the states, but not the trade of the output.

Let me start in a logical manner - one point at a time:

The Constitution of India secures the freedom of Trade, Commerce and Intercourse within the Territory of India under Article 301, subject to reasonable restrictions & public interest ranging from Article 302-307. It is worth mentioning that Part XIII (Article 301-307) is in addition to Articles 14 & 19. Why are legal experts not looking at these Articles of the Constitution? In fact, the restrictive practices of not issuing licences to all the applicants by APMC itself is a violation of the constitution. Has the Hon'ble President of India given approval for all these APMC Acts in the country? If yes, state governments must display these prior consent letters of the Hon’ble President to the public.

Why Indian buyers and farmers were not allowed to trade their products freely anywhere in the country when the constitution permits this? When every other product and the commodity is allowed to be traded anywhere in the country why restrictions were imposed on the farmers? 

What was the motive behind these restrictions; it is not explained in any APMC Act of any state government. 

Are these the APMC Act for farmers? Please read the APMC Acts, nowhere it is mentioned.

Please read all the APMC Acts of all states it says (there is no mention of farmers and remunerative price for their crop):

1.  to regulate the marketing of agricultural and certain other products in market areas and markets, (for what and for whose benefit is not explained and mentioned)

2.  to confer powers upon Market Committees;(why small farmers do not have a majority in these committees, these committees are dominated by people those who are exploiting farmers)

3. to establish a Market Fund for purposes of the Market Committees. (Purpose and management of the fund is not clearly mentioned)

Why will farmers always be exploited in APMC systems?

IMPORTANT: Nowhere in the APMC Act it is mentioned commission agents will not have a conflict of interest with farmers This is must to ensure that farmers should get fair and remunerative prices. Otherwise, commission agents will develop cartels and suppress prices. Like in stock markets, Brokers are not allowed to trade or do front running of the market, this is possible in APMC. There is no such provision in APMC law to prevent conflict of interest. APMC is technically a legalized cartelised system to exploit the farmers and consumers because APMC is managed by the licence holders having a conflict of interest in preventing competition. There is no independent body or regulator to ensure fair competition. It means the purpose of APMC markets is not for farmers and consumers because they have no say in the management of APMCs. 

Existing Agriculture Marketing Rules in APMCs are against Indian farmers 

India has accepted free and fair-trade regime as a member of WTO i.e. "One World- One Market". Why do the same political parties who signed the WTO Agreements, find that it is not logical and accepted as "One Country - One Market" in India?

As a country, we have agreed to a free and fair trading environment at the global stage, but we are not keen to offer the same benefit to the farmers of India. Why?  

When we signed WTO it was mentioned that free trade brings prosperity. Now, we are opposing the same benefits to India farmers, why?

This is one of the single most reasons for acute poverty in rural India where farmers live and work hard but never get due share of their hard work. The exploitation of farmers by licensed cartels was promoted and supported by states under the outdated laws of the shortage and closed economy of India of the 1960s, where there was no infrastructure and no mobile technology. For the last 70 years, farmers were exploited by all vested interest. Farmers remained poor and all middlemen became rich. Farmers were committing suicide due to financial distress, middlemen were sending their own kids aboard to study and to stay there. The world has changed but exploitation of farmers continues because outdated APMC laws created for exploitation remain in force. No amount of justification to continue with the existing system has any logic. 

In India, Imported farm produce enjoys the freedom of trade but the produce of Indian farmers have to go through has to face APMC restrictions, why?

Imported wheat, rice and pulses can be traded without any restrictions, but Indian farmers’ wheat, rice and pulses have to go through outdated and exploitative APMC mandi system route, Why? Is this logical?

Articles 301 & 304 (a) ring a bell or two regarding a well- known concept in International trade i.e. Regional Trade Agreements or Free trade Agreements (RTA or FTA) & National treatment.

The GATT- WTO regime has put in place a well-organized system of free trade/trade without barriers amongst member Nations. India is a founder member of this treaty, but when it comes to Indian farmers, we do not provide them with the same free and fair trading environment.

The tragedy in India is imported agriculture produce, as per WTO agreements, which can move freely within India without any restrictions, but the farm produce of Indian farmers cannot move freely within India. This is a unique example in the world where state governments in India are creating a problem for their own products and own trade against imported products.

This is making the Indian economy inefficient by increasing the cost of the transaction and by creating legal hurdles for investments and employment generation. 

Existing APMC law violates fundamental rights

Article 19 (1) (g), a fundamental right confers on the citizens the right to carry any profession or carry on any lawful occupation, trade or business. State APMC Acts violate this fundamental right for both buyer and seller of farm produce. Should we restrict any transaction between farmer and buyer of his crops? Chapter XIII of the constitution prohibits such restrictions. The state laws are imposing restrictions on free trade in India between various citizens of India located in various parts of India. The legality of the state laws should be questioned. Who is benefiting from these trade restrictions?

Misinterpretation of constitutional provisions by States created an exploitative environment: 

The list mentioned under Article 246, Schedule VII is not a source of power. The decision by the Constitutional Bench in the case of Ujagar Prints vs Union of India, reported in [1988 (38) ELT 535 (SC)] is a classic milestone. Arguments by Stalwarts and Erudition of the Bench had brought to light certain foundational principles.

The Hon'ble Supreme Court had laid down the following principle: Entries to a legislative list are not sources of legislative power but are merely topics or fields of legislation and must receive a liberal construction, inspired by a broad and generous spirit and not in a narrow pedantic sense. (para 18)

Let us now analyze what are provisions in the legislative lists:

In our view, these legislative lists are defined for better governance and to enhance the welfare of the people of India, not for the exploitation of them by giving them the power to exploit the citizens or to curtain their entrepreneurship. 

> Union List: Entry 42: Inter-State Trade and Commerce: Agriculture and Livestock Produce is a commodity for trade. Farmers are growing crops and livestock for trade. The Union government is duty-bound to ensure that transactions between farmers and buyers are unrestricted within India. Union Law should facilitate the same. There is no exception given in this regard in this list.

> State List: Entry 14: Agriculture, including agriculture education and research, protection against pests and prevention against diseases. This is clearly defined as agriculture. Let me clarify that agriculture is a production process and restricted to pre-harvesting activity. It means crop production is the domain of the state.  The state may advise farmers, based on agro-climatic consideration, disease outbreaks, water level, to conserve natural resources, which crop should be promoted or discouraged, can be decided by the state. Once the crop is harvested it is no more agriculture. This difference must be clear to everyone. Let me clarify once again: we all eat wheat i.e foodstuff, we do not eat agriculture. Therefore the law is for foodstuff, not agriculture. 

The post-harvest output like grains, oilseeds, fodder, cotton, jute, etc. are commodities for trade. The law is to facilitate trade. These new laws are not agriculture. Agriculture is a science and art of crop production. In other words: photography and acting is art and science, but cinema is a product. The drafting team of the constitution understood this difference very clearly that is why they have used two different terms agriculture and foodstuff because food has to travel for consumption. Food security of citizens cannot be at the mercy of one state when other states are suffering due to shortage or inflation. That is why trading of agriculture outputs including foodstuffs was placed in the Union list.

> State List - Entry 28: Markets and fairs: It is true that state governments are allowed to frame the law in these domains. Let states create mandies, fairs and markets and manage them as their state assets. If they are useful and beneficial to farmers and traders, they will use them. If they are not, states cannot force them to use them or pay for them. The government can collect user changes from those who use but cannot force mandatory user chargers from those who do not want to use them because of poor location or bad infrastructure or unsuitability to do fair trade.  

According to the constitution, these rules and regulations must not infringe the fundamental rights of the citizens. The Constitution Chapter-13 says actions of the states must not restrict trade and commerce and should not kill the entrepreneurial spirit of the people of India. Any law which acts against this spirit must be reviewed and challenged in the national interest.

> Concurrent List: Entry 7: Contracts, including partnership, agency, contracts of carriage and other special forms of contract, but not including agriculture land. The Union government can make laws to promote contracts between buyer and seller of agriculture commodities. The contract can be verbal or in writing. The scope of the contract is a mutual decision of the parties involved. Once again, agricultural land is the state subject and union laws cannot have to say on agricultural land. Therefore all the rumours that Union Acts will lead to encroachments on the agriculture land by corporates is nothing but mischievous propaganda. 

While discussing farmers' right to trade let us seriously study the full chapter-XIII of the Constitution on Trade and Commerce. Concurrent List in Entry 33 clearly says Trade and commerce in and the production, supply and distribution of -

(a) the products of any industry where the control of such industry by the Union is declared by Parliament by law to be expedient in the public interest, and imported goods of the same kind as such products

(b) foodstuffs, including edible oilseeds and oils

(c) cattle fodder, including oilcake and other concentrates

(d) raw cotton, whether ginned or not ginned and cottonseed; and

(e) raw jute.

All output from farms will fall in the above categories. Therefore, the constitution empowers the union government to frame the law in this regard.

What are the options before the Union Government under the Constitution?

In the interest of the welfare of people of India including farmers and the development of India, the Union government can always frame a law under various provisions of the Constitutions Constitutional validity of all the provisions of the APMC Acts should be studied.

State Governments are always free to improve the free market, in place of having restrictions, which may hurt the welfare of the citizens of India. Any restrictive practices to hurt the interest of farmers and consumers by any state must be opposed by all. This is also against the spirit of the Constitution of India. 

Readers should also be clear that laws for production methods or processes i.e. agriculture and different laws for trade in agro-commodities and finished goods. You may have labour law, electricity law, pollution laws on how to run a dairy factory to make a safe product but you cannot apply the same laws on the output of the factory say milk. Milk trade will have separate laws to facilitate trade. 

For example: When in doubt, always keep in mind, what we consume is foodstuff and not agriculture. Illogical extension of argument will never ensure logical governance. 

This confusion led to wrong interpretation of the Constitution even by legal experts is very unfortunate and farmers were exploited for 70 years. These new farms produce trade laws are the first serious attempt to liberate the farmers from the cartels and provide them with the freedom to deal in a free market. 

The welfare of farmers is only possible when they will start dealing directly with consumers, either individually or collectively, without any middlemen and trade-restrictive laws. This is what the Constitution of India also encourages.

Please feel free to send your questions for clarification. 

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Happy Republic Day to All of You.