Today's Editorial - 15 October 2020
Farm Acts and federalism
Source: By Faizan Mustafa: The Indian Express
On 4 October 2020, the President gave assent to the controversial farm Bills passed by Parliament last week. Amid protests by farmers’ organisations across the country, Chhattisgarh, Maharashtra, and Punjab have said they might not implement the new laws, Kerala and Punjab have declared their intention to challenge them in the Supreme Court, and a Congress MP from Kerala, Prathapan T N, has already done so.
What are the broad arguments for and against the laws?
The government claims these Acts will transform Indian agriculture and attract private investment. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, provides for contract farming, under which farmers will produce crops as per contracts with corporate investors for a mutually agreed remuneration.
The protesting farmers fear that powerful investors would bind them to unfavourable contracts drafted by big corporate law firms, with liability clauses that would be beyond the understanding of poor farmers in most cases.
According to the government, The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 liberates farmers by giving them the freedom to sell anywhere.
The Opposition says this would lead to corporatisation of agriculture, with the market, along with the monsoon, becoming an unpredictable determinant of the destiny of farmers. They argue that farmers can sell outside the APMC even now, and most in fact do, albeit after paying the required fees or cess.
In Punjab and Haryana, the epicentre of the protests, the market fee, rural development fee, and arhatiya’s commission are 3%, 3%, and 2.5%; and 2%, 2%, and 2.5% respectively. These are big sources of state revenue — with states not permitted to levy market fee/cess outside APMC areas under the new laws; Punjab and Haryana could lose an estimated Rs 3,500 crore and Rs 1,600 crore each year respectively.
What is the question over the constitutionality of these laws?
As per Union of India v H.S.Dhillon (1972), constitutionality of parliamentary laws can be challenged only on two grounds — that the subject is in the State List, or that it violates fundamental rights. Is invoking parliamentary powers on agriculture consistent with the scheme of federalism and spirit of the Constitution? Does Parliament have the power to enact laws on agricultural markets and lands? Should the Constitution have been amended before enacting these laws?
These are some of the questions that will be raised in the petitions challenging the constitutionality of the Acts. As per Ram Krishna Dalmia v Justice S R Tendolkar (1958) and other judgments, the Supreme Court will begin hearings after presuming the constitutionality of these laws; therefore, the burden on states and individuals who challenge these Acts will be quite heavy. Generally, the Supreme Court does not stay the implementation of parliamentary laws. CAA and UAPA were not stayed.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020, and The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 do not mention, in the Statement of Objects & Reasons, the constitutional provisions under which Parliament has the power to legislate on the subjects covered.
And where does the question of federalism come in?
Federalism essentially means both the Centre and states have the freedom to operate in their allotted spheres of power, in coordination with each other. The Seventh Schedule of the Constitution contains three lists that distribute power between the Centre and states. There are 97 subjects in the Union List, on which Parliament has exclusive power to legislate (Article 246); the State List has 66 items on which states alone can legislate; the Concurrent List has 47 subjects on which both the Centre and states can legislate, but in case of a conflict, the law made by Parliament prevails (Article 254). Parliament can legislate on an item in the State List under certain specific circumstances laid down in the Constitution.
In State of West Bengal v Union of India (1962), the Supreme Court held that the Indian Constitution is not federal. But in S R Bommai v Union of India (1994), a nine-judge Bench held federalism was part of the basic structure of the Constitution. “Neither the relative importance of the legislative entries in Schedule VII, Lists I and II of the Constitution, nor the fiscal control by the Union per se are decisive to conclude the Constitution is unitary. The respective legislative powers are traceable to Articles 245 to 254… The State qua the Constitution is federal in structure and independent in its exercise of legislative and executive power,” it said.
Federalism, like constitutionalism and separation of powers, is not mentioned in the Constitution. But it is the very essence of our constitutional scheme.
Where is agriculture in the scheme of legislative powers?
Terms relating to agriculture occur at 15 places in the Seventh Schedule.
Entries 82, 86, 87, and 88 in the Union List mention taxes and duties on income and assets, specifically excluding those in respect of agriculture.
In the State List, eight entries contain terms relating to agriculture: Entry 14 (agricultural education and research, pests, plant diseases); 18 (rights in or over land, land tenures, rents, transfer agricultural land, agricultural loans, etc.); 28 (markets and fairs); 30 (agricultural indebtedness); 45 (land revenue, land records, etc.); 46 (taxes on agricultural income); 47 (succession of agricultural land); and 48 (estate duty in respect of agricultural land).
In the Concurrent List, Entry 6 mentions transfer of property other than agricultural land; 7 is about various contracts not relating to agricultural land; and 41 deals with evacuee property, including agricultural land.
It is clear that the Union List and Concurrent List put matters relating to agriculture outside Parliament’s jurisdiction, and give state legislatures exclusive power. No entry in respect of agriculture in the State List is subject to any entry in the Union or Concurrent Lists.
What about Entry 27 of the State List that is subject to Entry 33 of List III (Concurrent)?
Entry 33 of the Concurrent List mentions trade and commerce, production, supply and distribution of domestic and imported products of an industry over which Parliament has control in the public interest; foodstuffs, including oilseeds and oils; cattle fodder; raw cotton and jute. The Centre could, therefore, argue that it is within its powers to pass laws on contract farming and intra- and inter-state trade, and prohibit states from imposing fees/cesses outside APMC areas.
However, like education, farming is an occupation, not trade or commerce. If foodstuffs are considered synonymous with agriculture, then all the powers of states in respect of agriculture, listed so elaborately in the Constitution, shall become redundant.
So what happens in case of legislation that covers entries in two Lists?
In cases such as State of Rajasthan v G Chawla (1959), courts have used the doctrine of “pith and substance” to determine the character of legislation that overlaps between entries. The constitutionality of legislation is upheld if it is largely covered by one list and touches upon the other list only incidentally. But the two new farm Acts beyond that — they impinge on entries in the State List.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 flies in the face of Entry 28 of the State List (markets and fairs), and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 impinges on Entries 14, 18, and 46 of the State List, and Entry 7 of the Concurrent List (above). In interpreting the lists, the Supreme Court in State of Bihar v Kameshwar Singh (1952) invoked the doctrine of colourable legislation, which means you cannot do indirectly what you cannot do directly.
In ITC Ltd v APMC (2002), the Supreme Court upheld the validity of several state laws relating to agricultural produce marketing, and struck down the central Tobacco Board Act, 1975. It interpreted Entry 28 of the State List (markets and fairs) in favour of states, and rejected the Centre’s argument based on Entry 52 of the Union List read with Entry 33 of Concurrent List that tobacco is an industry declared as being under the control of Parliament in public interest. It said raw materials or activity that does not involve manufacture or production cannot be covered under ‘industry’.
What is the government’s stated view on agricultural markets?
The committees headed by Ashok Dalwai and Ramesh Chand recommended that ‘agricultural market’ be entered in the Concurrent List. It is implicit in the recommendations that “foodstuffs” under Entry 33 of the Concurrent List do not empower Parliament to enact laws on agricultural markets.
On May 5, 2015, the government told Lok Sabha that the National Commission of Farmers (Swaminathan Commission) had recommended ‘agricultural market’ be added to the Concurrent List. On March 27, 2018, the government yet again told Lok Sabha that it has no intention of inserting ‘agricultural market’ in the Concurrent List.