Political Posturing: Punjab’s anti-farm-reform laws are intended to make it seem like the Centre’s wanted to abolish MSP

The amendment Bills the Punjab government has passed to blunt the new central Acts that free up the farm sector are a clever gambit. By making minimum support price (MSP) part of the law and mandatory (for wheat and paddy), the new laws cement the—wholly incorrect—impression that the central government was planning to scrap the system of procuring farm output at MSPs. The MSP system is inefficient, and it distorts cropping patterns—it is responsible for the depletion of the water-table in states like Punjab—but the central government was not even considering giving it up; it is from nowhere that political parties conjured this alleged game-plan and then sought to mobilise opinion around it.

The Punjab Bills make sale/purchase of wheat and paddy below illegal and punishable with imprisonment. And by introducing a fee on trade outside APMC mandis, these negate the Centre’s move to free farmers and buyers from the APMC’s and arhatiyas’ tight grip on agri-trade in the state; the charging of fees puts other trade in non-mandi areas/spaces, including that conducted digitally, on a par with the mandis. Punjab earned Rs 1,750 crore in mandi fees in FY20, and a similar amount in a rural development cess charged on sales in the mandis, while arhatiyas had made nearly Rs 1,500 crore as commission, largely paid by the Food Corporation of India that procures most of the state’s grains. This is the real reason for its opposition, but the new laws cleverly gloss over that.

While the state’s new Bills run afoul of the central Acts, the Governor will likely pass them on to the President for his consideration; even if he rejects them once, he has no option if the government sends him the Bills a second time. Given the process Article 254 of the Constitution prescribes for dealing with laws in the Concurrent List that go against the central law, the central government should advise the President not to give his assent. If, for some reason, the central government decides that this will go down badly, another option is to go along while exposing the reality behind the Punjab government’s actions. The way to do that is to carry on with its usual MSP-based procurement in the state so that farmers do not suffer—in any case, the centre does not plan to curtail MSP operations—but to do so only if the Punjab government does not charge either the mandi charges or the rural development cess. If the arhatiyas are to get political patronage—for doing nothing, since the prices are fixed, as is the open-ended purchase by central government agencies—then Punjab must bear this cost.