Even as the Centre has proposed a central law for dismantling the monopoly of agricultural produce market committee (APMC) mandis in wholesale trading of farm commodities, the response of state governments, particularly Opposition-ruled ones, to the move remains to be seen.
Agriculture being a state subject under the Constitution, any central legislation seeking to remove barriers to trade and creating a unified national market for farm produce could trigger a fresh debate on federalism. However, officials behind the drafting of the proposed new law — the Agricultural Produce Trade & Commerce Facilitation Act — stress that there is no attempt by the Centre to encroach upon a territory reserved for states under the Seventh Schedule.
The Seventh Schedule (Article 246) places “agriculture” in entry 14 and “market and fairs” in entry 28 of the State List. The APMC mandis, where farmers bring their produce to sell through licensed commission agents or arhtiyas, accordingly operate under the jurisdiction of state governments. These regulated market yards — there are some 2,500 of them across the country in almost every taluka/tehsil — have been established under APMC laws enacted by individual states.
“We aren’t taking away any powers of APMCs, as far as trading of products within the premises of their market yards or sub-yards are concerned. They can continue to charge market and licensing fees from buyers and arhtiyas for all transactions within the boundaries of the mandis. Farmers, too, may prefer to sell in APMC mandis, given the existing infrastructure (auction platforms, facilities for grading, sorting and cleaning of produce, weighbridges, godowns, etc) and advantages of dealing with multiple buyers assembling there,” the officials pointed out.
What the new central Act proposes is to limit the powers of APMCs only to trading taking place “within the four walls of the mandis”. Currently, the APMC Acts of many states provide that any first sale of farm produce can be conducted only in the designated mandis of the talukas or districts concerned. This exclusive monopoly given to APMC mandis extending beyond their physical boundaries is what is now sought to be dismantled.
According to legal experts, the Centre can invoke Article 301 of the Constitution that deals with freedom of trade, commerce and intercourse. “Subject to the other provisions of this part, trade, commerce and intercourse throughout the territory of India shall be free,” the Article reads. Additionally, the Centre has powers to regulate “inter-state trade and commerce” under entry 42 of the Union List in the Seventh Schedule.
A landmark 1961 Supreme Court ruling (Atiabari Tea Co. Ltd v/s The State of Assam & Others) had interpreted Article 301 to include not just inter-state, but also intra-state trade in goods. The mandate of this Article that envisages India as a unified marketplace has also been echoed in the one-nation, one-tax reforms through the Goods and Services Tax.
The experts noted that entry 28 of the State List dealing with “markets and fairs” does not prevent the Centre from framing legislation. The State List also has entry 26 referring to trade and commerce within a state. But the latter is, in turn, subject to the provisions of entry 33 of the Concurrent List, under which the Centre can also make laws that would prevail over those enacted by the states,” they said.
Further, entry 33 of the Concurrent List covers trade and commerce in, among others, “foodstuffs, including edible oilseeds and oils”, “cattle fodder, including oilcakes and other concentrates”, “raw cotton, whether ginned or unginned, and cotton seed”, and “raw jute”. In other words, the Centre is well within its rights to enact a law that removes all impediments to both inter- and intra-state trade in agricultural produce, while also overriding the state APMC laws.
But whether this approach would go down well politically is yet to be known. In the last 10 days, four BJP-ruled states — Uttar Pradesh, Madhya Pradesh, Gujarat and Karnataka — have brought in ordinances to amend their APMC acts to allow farmers to sell produce directly to processors and traders bypassing the regulated mandis without the buyers having to pay any market fee. Traders will also be granted single unified licences enabling them to buy from any APMC market, rather than having to procure separate licences for transacting in individual mandis.