Another reason not to invest in India PDF Print E-mail
Wednesday, 13 January 2021 03:58
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If a law passed by Parliament can be put in abeyance, what does it say about the certainty of doing business in India?

Supreme Court can scrap laws if they are unconstitutional, but it has not hinted that this was the case with the farm laws. SC action will encourage other groups to exert similar pressure


Almost as soon as the Supreme Court's (SC) hearing on the farm laws began on Tuesday, it was obvious its plan to keep the laws in abeyance—while a court-appointed committee came up with a solution—was going nowhere since the lawyers for the farmers were not even present at the hearing; Dushyant Dave, Colin Gonsalves, HS Phoolka and Prashant Bhushan were the farmers' lawyers. While Dave later told CNBC-TV18 that he did not go to court since the matter was listed 'for orders'—that means the bench will pronounce its ruling/decision, not hear more arguments—on Monday, he also added that, in any case, the farmer unions had made it clear on Monday itself that they were not going to participate in the committee's deliberations.

Though SC’s Tuesday order says “representatives of all the farmers’ bodies, whether they are holding a protest or not and whether they support or oppose the laws shall participate in the deliberations of the Committee and put forth their view points”, several unions have said they will not comply; as BKU spokesperson Rakesh Tikait put it, “Bill wapsi nahin toh ghar wapsi nahin". Farmer groups have also alleged that since the panel is packed with supporters of the farm laws—Ashok Gulati of Icrier writes a fortnightly column in Financial Express— its report will support the government.

This is casting aspersions on the professional integrity of the members and their ability to write an unbiased report; most of Gulati's pieces in FE, as it happens, are critical of government policy on agriculture. But it is clear the SC has not just dug itself in a hole, it has dealt a big blow to decision-making in the country. If a law passed by Parliament can so easily be put in abeyance, what happens to those who are planning investments and new businesses based on the new laws, and not just those on agriculture?

It was always clear that the farmers wanted a total repeal of the laws, a legislative guarantee that MSP would continue, and that the government would procure the 23 MSP crops every year. So, farmers were never going to accept any SC committee. It appears SC did not seriously examine—or dismissed it after examination—the possibility that farmers would not participate in the deliberations. Given that farmer-government talks have failed on these core demands, SC’s myopia is inexplicable.

A charitable explanation for SC’s decision was that it would diffuse the tension as, once the panel was set up, the farmers would go back home. While that looked like a pipe dream even then, the farmers have  made it clear they will not go home till they get their way.

If the farmers don’t participate in the panel’s deliberations, or they disagree with its conclusions—right now, both possibilities appear plausible—what is SC’s game-plan? Will it allow the government to go ahead with its negotiations with farmers or will it put the laws in abeyance once again? The problem with the latter is that it sends out a clear signal to everyone that, if you want a law changed, and can muster enough persons to gherao the capital or some important building like Parliament, you can get SC to keep the law in abeyance, while a panel decides on whether the law is right or wrong.

SC had one category of petitions, it says in its order, that challenged the constitutional validity of the three farm laws; one even challenged the third amendment to the Constitution in 1954 (!) that allowed the centre to legislate on a subject in the state list. The constitutional validity of the laws is really the only section under which SC is supposed to act; it did not examine this, however, but felt it was all right to hold the laws in abeyance—an ‘extraordinary order’, it admits—so that farmers would participate in the meetings in ‘a congenial atmosphere’ and so that their ‘hurt feelings’ would be ‘assuaged’.

SC saying this is truly extraordinary and betrays a poor understanding of the issues at stake. Indeed, the impression has been spread—and SC seemed to have bought into it—that the three laws were rushed through, without adequate consultation etc. Juxtaposed with this is the view that poor farmers are being short-changed; indeed, that is why they were braving the cold, and risking Covid-19, by camping on the capital’s streets.

A reading of the government affidavit (bit.ly/38B7hke), however, details how there have been discussions, including with state governments, going back two decades at least; this newspaper pointed out that, way back in 1986, the Johl committee had flagged the need to diversify Punjab agriculture away from rice and wheat. Indeed, SC failed to note that the first inroads into the APMC Act, to allow farmers to sell fruits and vegetables in other markets other than the APMC ones, were made during the UPA period.

That is also why, the Congress party’s election manifesto had said it would abolish the APMC monopoly; a point worth keeping in mind is that APMC markets are not being abolished, it is their monopoly that is being challenged by allowing farmers to sell in other markets, including directly to consumers. This is important because the argument made is that the farmers will have to now sell to the Ambanis and the Adanis; that is not true, all that happens is that, if they want, farmers can sell to Ambani and Adani, or to Walmart or Mother Dairy or Patanjali or to farmer cooperatives, to just anyone. 

Another factor that probably influenced SC was the view that small and marginal farmers—and in very large numbers—were being hit by the new laws. That, however, is not true at all. While the farmer unions from Punjab are agitating for a legislatively guaranteed MSP, just 5-6% of farmers across the country benefit from this today; the rest sell their crops in mandis even if the prices there are 20-40% below the MSP announced for various crops. In any case, for crops like fruits and vegetables, MSPs are not even announced.

Resolving the issue, it is true, is not going to be easy. Legislatively guaranteeing MSPs can cost lakhs of crore rupees each year and the money is much better spent on creating new irrigation facilities etc—farm subsidies are four times the government capex in the sector!—as that will benefit all farmers. But resolving the issue is the government’s problem, not SC’s. SC has queered the pitch for the government by getting into its domain, and farmers are already saying the SC stay means it feels the laws are unconstitutional. In addition, SC has also eroded its own authority. Both augur badly for India’s future.



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