Centre’s Farm Bills attempt to bypass state laws on agriculture. How can the states respond?

The Bharatiya Janata Party government on Sunday rammed through two agriculture-related laws in the Rajya Sabha amidst accusations that the deputy chairman had refused requests from Opposition members to count the votes of individual members.

Even though the BJP has claimed that the laws are a historic reform. there have been protests against the Bills in several states, especially Punjab and Haryana. Even the BJP’s ally, the Shiromani Akali Dal, opposed the Bills. Union Cabinet Minister Harsimrat Kaur Badal of the party resigned from the government on Thursday.

On Sunday, Opposition MPs went into the well of the Rajya Sabha and shouted slogans against the deputy chairman’s decision to pass the Bills by voice vote. This resulted in eight MPs being suspended on Monday. Twelve Opposition parties also moved a no-confidence motion against the deputy chairman Harivansh Narayan Singh, which was rejected by Chairman Venkaiah Naidu on Monday.

Even as the MPs continue to protest the actions in Parliament, the leaders of several states – whose power to govern the functioning of agriculture will be severely eroded by the new laws – are considering their options to take on the Centre.

Federal challenge

Punjab Chief Minister Amarinder Singh told reporters in Chandigarh on Sunday that the state would file a case in the Supreme Court against the laws, which he described as “anti-farmer”.

Other parties have said that the laws are an attack on federalism. The Trinamool Congress and the Dravida Munnetra Kazhagam have accused the Centre of trying to usurp powers of the state governments by claiming that these are reforms.

Critics say that instead of working with the state governments to change the way agricultural markets work, the Centre simply promulgated these three Bills as ordinances in May, without any consultation. These changes are tremendously significant: analysts have compared them to the 1991 structural alterations that deregulated the Indian economy. But because they were carried out by sidestepping the states, they are also being referred to as “bypass reforms” .

While agriculture is in the state list under the Constitution, Entry 33 of the Concurrent List provides Centre and the states powers to control production, supply and distribution of products of any industry, including agriculture. Given that many state governments are opposed to the Central laws, what are the options available to the states to counter them?

Rajasthan’s gambit

In September, the Congress government in Rajasthan became the first state to attempt to nullify some of the provisions in the Central laws when they were still ordinances. The state seems to have taken a smart route, given the constitutional position that neither a legislation nor a subordinate legislation at the state level could be in repugnance to the Central law.

Simply put, the Central law attempted to create new market areas where farmers could sell their produce without being subject to state regulations and fees. In response, Rajasthan simply designated all those new areas also as state-controlled markets.

The principal element of the Rajasthan order is that it does not make any changes to the Central law. Rather, it uses an administrative order to counter the Central law by using provisions of a state law.

The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 essentially barred the state governments from levying fees on purchase or sale of produce outside the mandis functioning under the state Agriculture Produce Market Committees.

That is, any such transaction outside the notified markets will no longer attract fees from the state government.

Section 6 of the law said, “No market fee or cess or levy, by whatever name called, under any State APMC Act or any other State law, shall be levied on any farmer or trader or electronic trading and transaction platform for trade and commerce in scheduled farmers’ produce in a trade area.”

The trade area includes areas of produce transactions such as farm gates, warehouses and cold storage. It also includes warehouses under the central government.

It, however, excludes market yards and sub-market yards already notified under the State Agricultural Produce Markets Act, in addition to private market yards and sub-yards notified under the state laws.

This is where the Rajasthan government has used its executive power.

According to The Wire, the Rajasthan order converted all warehouses under the Food Corporation of India, the Central Warehousing Corporation and the Rajasthan State Warehousing Corporation, meant for procurement on minimum support price, as procurement centres or markets.

The state seems to have exercised its powers under Section 3 of the Rajasthan Agricultural Produce Markets Act, 1961, which gives the state government powers to declare a market area through a notification.

The effect of these notification by Rajasthan, The Wire noted, was that market fees would have to be paid by central government warehouses to the state government.

Is it legal?

Usually, when a state wants to amend a Central law made under one of the items in the concurrent list, it needs the clearance of the Centre. When a state law contradicts a Central law on the same subject, the law passed by Parliament prevails. This is an arrangement envisaged as most Parliament laws apply to the whole of India and states amending the Central laws indiscriminately could lead to inconsistencies in different regions on the application of the same law. In matters of trade and commerce, this could especially pose serious problems.

However, the Rajasthan order does not amend the Central law. Instead, it has used powers available with it under a state law to circumvent certain aspects of the Central law.

This means, the order will not be sent to the Centre for its approval, giving it no chance to reject it. If the Centre wants to ensure that Rajasthan follows the provisions of the central law as it is, it might be forced to take the state government to court.

This, however, will not be easy. The moment a litigation is moved by the Centre, the state will question the very competence of Parliament to wade into a subject for which there is already a comprehensive state law.

Politically, the option before the BJP-led Centre would be to instigate a petition in the Rajasthan High Court by an individual, challenging the administrative order issued by the state government that is in the manner of nullifying the aspects of the central law.

Given the route that Rajasthan has taken, it is possible that other state governments opposed to the central laws too could issue orders to circumvent whatever is possible. However, much will depend on how the laws relating to agricultural markets have been framed in the respective states.

Judicial challenge

The other option available with the states is to take the Centre to the Supreme Court over the validity of these laws.

Article 131 of the Constitution provides exclusive jurisdiction to the Supreme Court to adjudicate matters between the states and the Centre.

Punjab Chief Minister Amarinder Singh has already said that the state would move the Supreme Court.

It is also possible for farmers’ unions attached to political parties to challenge the law in the courts. The unions, however, can move even the High Court under Article 226 of the Constitution.