Recently, the Bharatiya Janata Party (BJP)-led Indian government passed three bills in the Parliament affecting the agricultural sector in India, which employs 41.49 % of the workforce. In certain states, like Punjab, Haryana and Uttar Pradesh, this percentage is much higher.

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

Three bills, many complaints

The first bill essentially abolishes the Agricultural Produce Market Committee (APMC) mandis, “removes barriers to inter-State trade and provides a framework for electronic trading of agricultural produce”. It also severely curtails the rights of the state governments to collect fees or any other levies.

The above issues come under entries 14 and 28 of the state list under Article 247 of the Constitution. Thus, the bills are being seen as a direct attack on the federal structure and the power of the states.

These AMPCs were established as safeguards from large corporates and ensuring that the Minimum Support Price (MSP). Those opposing the bill see the abolition of these mandis as a direct attack on the MSP system. These taxes are used for development work in rural areas by the state governments.

In the state of Punjab, for instance, these markets levy 8.5% tax including 3% market fee, 3% rural development fund, and 2.5% commission of the commission agents. Under the bill, States are no longer allowed to impose a cess outside APMC areas and this could cause a loss of over Rs 3,000 Crore in Punjab and 1,500 Crore in Haryana.

The other bill, the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, deals with contract farming. The central government claims that this bill will provide a framework for sale that will enable the farmers as well as the other parties.

Many prominent agricultural experts have supported this in principle, arguing that Punjab’s excessive dependence upon Wheat and Paddy has ruined its water level. The state government itself has been nudging farmers to move away from the same, but in an incremental manner.

But many farmers as well as critics of the bill believe that with the absence of guarantee of MSP, the door that would lead to corporates exploiting farmers will always remain open. This is worrying because 85% of Indian farmers own less than 5 hectares of land and the problem is more pronounced in Punjab.

Critics of the bill are also skeptical about the fact the bill prescribes formal legally-binding contracts, which will push the already impoverished tenant farmers into a legal abyss, with rich and powerful corporates and serving small farmers on a platter. 

The last bill, the Essential Commodities (Amendment) Bill, deals with removal of items, like cereals, oils, pulses, onions and others from the list of essential commodities, deregulating the procedures around the production and procurement of these commodities. 

Political repercussions

The bills have been met with fervent opposition within and outside the Parliament. The most important political repercussion for the BJP is the break-up of its longstanding alliance with the Punjab-based Shiromani Akali Dal (SAD).

SAD pulling out of NDA 

SAD, whose traditional core support base consists of Punjabi farmers, was one of BJP’s oldest allies, and the break up of the alliance took place days after the only representative of the SAD in the Union Cabinet and Minister of Food Processing Industries, Harsimrat Kaur Badal, resigned. Ten days later, her party withdrew from the NDA in opposition to these bills.

The SAD had reportedly asked the government to hold on to the bills until that it had asked the BJP to pass the bills until “…all reservations expressed by farmers’ organisations, farmers and farm labourers are addressed.”

While the SAD pulling out of the NDA is being dubbed as mere cynical politics by the regional party, which is in doldrums, it comes less than a year after Shiv Sena did the same. Both parties are the oldest allies of the saffron party. considered BJP’s oldest allies. 

Indian National Congress (INC) president, Sonia Gandhi, has also asked the INC-ruled states to explore other avenues and consider passing legislations in their respective states under Article 254(2) of the Constitution, which allows state legislatures to pass a law to negate the anti-agriculture union laws.


Farmers and political parties all over India have been protesting against the APMC-specific bill. It has received vociferous opposition in  Punjab, Haryana and western Uttar Pradesh. In the state of Punjab, all parties have protested alongside 31 farmers groups.

The Bandh on 25 September at Shambu village in Patiala (Punjab-Haryana interstate border) got a very strong response. Apart from thousands of farmers, a number of Punjabi artists and individuals from different walks of life were present. During the bandh, the national highway was blocked

As observed by many, it is for the first time that protests in Punjab have cut across ideologies and class. A number of farmers have also spoken about the need to move beyond demanding just the repealing of bills. They do not want to be constrained from selling their produce in overseas markets, especially Pakistan and Central Asia.

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In UP, the Pragatisheel Samajwadi Party, student organisations and the INC have been protesting against the bill, with the UP Congress chief also facing arrest for protesting.

In the southern part of the country, protests are picking up. In Tamil Nadu, DMK’s Stalin joined the protests with various farmers associations and unions and said that his party was ready to go to court. In Karnataka, INC and JDS workers were detained for calling a statewide bandh in opposition to the bills. Similarly, in Telangana, INC leaders were detained.

Further, the Congress in Rajasthan and all parties apart from the BJP in West Bengal have urged their governors to withdraw these ‘Black Laws’.

Attempt to centralise power

The NDA government’s impulse to centralise power has been very clear since it took charge in 2014. In this vein, a key critique of the APMC bill is that it attempts to centralise power and grab the little power that the states possess.

The AMPCs were established by the state governments in order to facilitate the farmers and make sure that they receive MSP. In turn, they levied some fees and cess on such mandis. As mentioned earlier, the AMPC bill also severely curtail the rights of the state governments to collect fees or any other levies they had earlier imposed. Even legally, it infringes upon their rights as these topics come under the state list. 

These three bills are only a part of a long list of things the government has attempted to centralise power. Another bill that was passed in this session was the Banking Regulation (Amendment) Bill, 2020, which takes away the power of states to regulate cooperative banks and gives it to the union government.

Cooperative banks are grassroots organisations meant to be in the state list and were until May, under entry 32 of state list. The union government has tried to bring them under entry 45 of union list. In May, a constitution bench headed by Justice Arun Mishra had affirmed the power of the union government over banking operations of cooperative banks under entry 45 of the union list.

With the passage of the bill, even grassroots-level institutions are being centralised ignoring the cultural and linguistic importance of having these under state control.

A very important example of how government’s centralisation is manifesting is the Goods and Services Tax (GST), introduced by the government in 2017. Noted economist and former Governor of the Reserve Bank of India (RBI), Raghuram Rajan, had described this as “excessive centralisation of power”.

The Centre routinely fails to pay the states its compensation as well as the Integrated GST (IGST), and has recently even compelled the states to borrow to cover such dues.

Also read ‘COVID-19 in India: Agrarian and Informal Sectors Under Severe Stress’

A recent report by the Comptroller and Auditor General (CAG) stated that the central government violated the GST Compensation Cess Act, 2017, which makes sure that the GST cess is credited to the GST Compensation Cess Fund for providing compensation to states. However, the CAG found that the Modi government retained Rs 47,272 crore of the GST cess in the Consolidated Fund of India during 2017-19. The finance ministry denied this even though the CAG’s report tabled in the parliament shows violations. A number of states have been seeking their share in the GST since long.

Even the Inter State Council set up on the recommendation of the Sarkaria commission in 1990 to deal with Centre-State friction has failed and collapsed. It has only met 12 times since its inception, with the last meeting held in 2017. Even the recently constituted committee on culture finds no representation from the South despite so many issues in the recent years about Hindi imposition.

The centre’s centralisation trend is extremely worrying, particularly because dialogue has broken down. The centre, which would initiate the dialogue in the past seems interested only at centralising power at the present.

Cooperation among states

Many non-BJP Chief Ministers have in the past voiced their concerns about centralisation. But what they lack is a common forum where all of them can create consensus or common ground and discuss issues pertaining to economics, agriculture, and disputes arising from natural resources.

A major problem is that regional parties, like TRS or BJD, which aren’t part of NDA, have not taken a clear stance against attempts of the central government to alter the federal fabric. But it is essential for the states to find common ground on such issues. Tensions are only set to rise between the centre and the states if the BJP government continues its centralisation drive leading up to the 2026 parliamentary delimitation.

Such a platform should not be driven merely by electoral politics. In the past, there have been attempts by regional parties to work together.

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In fact, the SAD, which was one of the first protagonists of decentralisation through the Anandpur Sahib resolution (the final version was considered to be a watered down version of the original one), had been at the forefront of greater coordination between regional parties, and had even proposed a conclave of non-Congress parties.

Post 1996, after providing unconditional support to the BJP, it has deviated from its commitment to federalism and supported steps like the abrogation of Article 370 in Kashmir. After walking out of the NDA, the SAD spoke about reviving greater coordination between regional parties. But it remains to be seen where this goes. 

Non-political cooperation needed

In recent years, some steps have been taken for enhancing cooperation between states on issues like GST, distribution of natural resources and others linked to greater centralisation.

While political alliances between regional parties have their own significance, a non-political platform is also needed for state governments to work jointly against excessive centralisation as well as to learn from each other’s policy successes.

Apart from the short term challenges, there are issues pertaining to economic diplomacy with the outside world and handling of the diaspora. The coming months would reveal whether regional parties have learnt anything significant from the farm bill protests, and whether they are willing the push back against the BJP government’s hunger for centralised authority.

Views expressed are the authors’ own.

Featured image (representational): Farmers during a sit-in protest at Jantar Mantar, New Delhi, 2017 | Aditya Srinivasan Singh, Flickr