Context: New Farm laws are only way to push agriculture out of low-income trap.
Problems associated with Indian Agriculture
Low Income and Small landholdings: especially for small and marginal farmers (who represent 86.21 % of total farmers). Their monthly income is approximately Rs 6,000.
No scope for increasing Area under cultivation: As 51 % of India’s area is already under cultivation.
Low contribution to Gross Domestic Product: around 17 %; due to reduced productivity.
Presence of intermediaries: determining the market price.
Price variation in production and consumption centres: While the Agricultural production centres have over-produce and low prices, shortages and high prices rule the roost at consumption centres.
Lack of storage facilities: About 16 % of fruits and vegetables and 10 % of oilseeds, pulses and cereals perish before reaching the consumer’s table.
This results in poor ranking of India (100th out of 118 countries in 2018) in Global Hunger Index (GHI) of International Food Policy Research Institute.
Exploitation of groundwater resources: Withdrawal of groundwater is more than China’s and the United States’ put together.
15th Finance Commission had observed power subsidies as the major reason for this exploitation.
Rice-wheat centric production system: due to Minimum Support Price (MSP), seed, fertiliser subsidies.
Significance of the new farm laws in reforming agriculture sector
Farmers (Empowerment and Protection) Agreement On Price Assurance and Farm Services Act, 2020
Promotes contract farming: to encourage private participation and investment (e.g. through technology infusion)
Provides protection against acquisition of farmer’s land and dispute redressal mechanism.
Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020
It helps farmers to get right price: by empowering them to sell their produce anywhere and thus liberates them from middleman.
It provides time limit for payments and includes a dispute redressal system.
Essential Commodities (Amendment) Act, 2020
More freedom for selling: as regulation is only under extraordinary circumstances.
Prevent black marketeers to take advantage of early law.