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Mainstream, VOL LVI No 40 New Delhi September 22, 2018

Legal Rights of Farmers under the Farmers Right to Guaranteed Remunerative MSP for Agricultural Commodities Bill, 2018

Tuesday 25 September 2018

by Shubham Kumar and Apurva Singh

“Bowed by the weight of centuries he leansUpon his hoe and gazes on the ground, The emptiness of ages in his face, And on his back the burden of the world”1

1. Introduction

In 2014, the Prime Minister of India Narendra Modi, in his address to the nation highlighted the shortcomings of the agricultural sector and stated that the prime focus of the government for the next five years shall be on improving the condition of the farmers and increasing their income. The Finance Minister, Arun Jaitley, also mentioned in his first Budget speech that the government intends to double the farmers’ income by 2022. Owing to this, the NITI Aayog released a research paper in March 2017, giving the roadmap and strategy to double the farmers’ income by 2022.

However, in the past four years the crisis in the agricultural sector has aggravated. The Economic Survey 2017-18 stated that the agricultural sector is likely to grow at 2.1 per cent, whereas the industrial sector and services sector are likely to grow at 4.4 per cent and 8.3 per cent respectively. The growth rate in the agricultural sector should be a cause of concern for the government, especially if they want to double the farm income by 2022. As per the latest National Crime Records Bureau (NCRB) data, 11,370 people in the farming sector committed suicide. The data of the NCRB also reveals that there has been an upsurge in the rate of suicide of agricultural labourers, which is a major cause of concern. One of the reasons behind this is the effect of climate change on agricultural activities, that is, either because of drought or due to floods. All these coupled with the crash in the prices of agricultural commodities during every harvest season has made farming in India a painful experience.2 The Agricultural and Other Rural Workers’ (Protection and Welfare) Bill, 2018 has been tabled in the Rajya Sabha that provides for the protective and welfare measures to the agricultural and other rural workers against exploitation and providing just and human working conditions for them.

The Uttarakhand High Court, in case of Dr Ganesh Upadhyay v. Union of India and Ors.3suggested that the Union Government and the State Government of Uttarakhand should come up with a suitable legislation providing legal status to the Minimum Support Price (hereinafter ‘MSP’). The Commission for Agricultural Costs and Prices (hereinafter ‘CACP’), a statutory body established for analysing the agriculture sector and recommending to the government on the MSP also suggested that the Centre should, by a legislation, confer legal rights to the farmers to sell their produce at the MSP as doing so would “instil confidence among farmers”.4

The government since independence has rolled out various beneficial policies for the farmers like crop insurance policy, minimum support price, soil health card, input management, Per Drop More Crop in Pradhan Mantri Krishi Sinchai Yojana (PMKSY), Pradhan Mantri Fasal Bima Yojna (PMFBY), e-Nam etc. However, the biggest impediment for the farmers has been the non-enforcement or improper implementation of these policies. The farmers have been continuously protesting and demanding hike in the MSP and requesting the government to come up with infallible solutions to tackle the crash in prices during the harvesting season. The majority of farmers have been protesting across India under the umbrella body of the All India Kisan Sangharsh Coordination Committee (hereinafter ‘AIKSCC’). The AIKSCC, after a number of protests across the nation on various issues concerning the farmers, prepared a draft Bill on Farmers’ Right to Guaranteed Remunerative Minimum Support Prices for Agricultural Commodities, Bill, 2018 (hereinafter ‘The Bill’). The Bill has been introduced in Parliament, in both the Lok Sabha and Rajya Sabha, by two parliamenta-rians as Private Members Bill. The Bill keeps in sync with the aforesaid suggestions of Uttarakhand HC judgment and recommen-dations of the CACP. This Bill, as contended by the AIKSCC, will entitle a farmer to claim the MSP as a ‘legal right’ and also provides grievance redressal mechanism. The Bill has received widespread acceptance and support from a lot of major regional parties.

In this article, we shall analyse various provisions of the Bill and suggest changes, if required. We will also highlight the merits and challenges of providing MSP as a legal right.

2. Legal Rights of the Farmers

The consumers in India have been conferred various rights through a number of legislations like the Essential Commodities Act, 1955 or the Consumer Protection Act, 1986. The same doesn’t hold true for the farmers. Globally, agriculture became a focal point of discussion only in 1986 during the GATT Round, also known as the Uruguay Round, wherein agriculture for the first time was included in trade discussions as it was considered that farmers are indispensable for the growth of an economy. In 2001, International Treaty on Plant Genetic Resources for Food and Agriculture was approved during the Food and Agriculture Organisation Conference. Later, India introduced the Protection of Plant Varieties and Farmer’s Rights Act, 2001 thereby becoming one of the foremost nations to do so. The said Act, recognised the rights of breeders and farmers and provided special mechanisms to safeguard their interests.

Imagine if Article 32 wasn’t there in the Constitution of India, in such a situation the remedy to enforce all the fundamental rights guaranteed therein would have ceased to exist, thereby making fundamental rights ineffective. Giving the MSP to the farmers without any legal recourse in case of violation can be compared to a Constitution without having right to constitutional remedies.5 The Constitution of India doesn’t explicitly confer any rights to the farmers. However, part IV (Article 36-51) of the Indian Constitution deals with the Directive Principles of State Policies (DPSP) enumerating socio-economic goals for the state. The state, in furtherance of the DPSP, takes active measures for ensuring social and economic status of every citizen. The Apex Court in the case of Olga Tellis v. Bombay Municipal Corporation,6 ruled that right to livelihood is essential for realisation of right to life as contained under Article 21 of the Indian Constitution. A conjoint reading of Article 38(2) and Article 39(a) of the Constitution would entail that the state shall take necessary measures to eliminate inequality and provide opportunities for securing adequate means of livelihood to the citizens. In furtherance of the aforesaid constitutional provisions and judgment of the SC in the Maneka Gandhi Case7 and the recent direction by the Uttrakhand HC,8 the farmers ought to be given certain legal rights to secure adequate means of livelihood in order to protect their dignity which is their fundamental right as contained in Article 21 of the Constitution.

3. Analysis of the Bill

The Minimum Support Price is a kind of “market intervention” by the government to protect farmers or producers from any steep decline in the prices of agricultural commodities. MSP, however, is not a legal or statutory right. This leaves the farmers at the mercy of the procurement officials. As aforesaid, the two standing pillars of the Bill are making the MSP a legal right, and introducing a grievance redressal mechanism.

Unlike most of the statutes in India, the Bill extends to the State of Jammu and Kashmir also. Section 2 (a) of the Bill defines “agricultural commodity” inclusively. Currently, the MSP policy is restricted to approximately 30 crops.9 It includes all forms of primary produce and agricultural commodities with their cognate expressions. The Bill can broadly be divided into four parts, that is, [A] provisions pertaining to the Guaranteed Remunerative MSP for All Agricultural Commodities; [B] establishment of the Commissions at the State and Central levels; [C] implementation of the provisions of the Bill; and [D] grievance redressal mechanism.

3.1 Part- [a]

Guaranteed Remunerative MSP for all agri-cultural commodities constitutes the Chapter II of the Bill. This part entitles the guaranteed remunerative MSP as a legal right to every farmer in the country. Section 4 of the Bill provides for the “comprehensive estimation of cost of production of all agricultural commodities”. Amongst several determinants to estimate the cost, the provision takes family labour into account as well. The Bill obliges the Central Government to institute methods requiring data collection on a timely basis in case of commodities for which the system of cost of estimation does not exist. It ensures timely reviewing of the cost estimation methodology and data. Usually, the MSP is calculated by the CACP. Section 5 of the Bill, however, vests the power of recommending the GRMSP to the Central Commission to be established under the Bill. The Commission shall have to take all factors stated in Schedule 1 of the Bill into account while estimating the comprehensive cost of production and the GRMSP.

To ensure that the MSP is announced without any delays, the Bill in Section 6 provides a deadline of February 28 in case of Kharif crops and July 31 in case of Rabi crops to announce the MSP. This marks a significant shift from the present scenario because up until July 5, 2018, the government was in the process of approving (and not procuring) hike in the MSP for Kharif crops.

3.2 Part- [B]:

Chapters III and IV of the Bill establish the Farmers’ Agricultural Costs and Remunerative Price Guarantee Commissions at the Central and State levels respectively. Both the Committees shall be autonomous in nature and shall have a term of five years. The Constitution of both the Committees is commendably diverse ranging from academicians to agricultural economists, and from ensuring regional diversity to gender diversity.10 The Committees also take sectoral representation and social background into account. The Committees shall have farmers experienced in agricultural economics, academicians, and bureaucrats as their members. The key problem with the Committees is that they have been vested with ostensible powers. The actual discretion to implement or modify the recommendations lies with the respective Central and State governments.11 Though the government, at every instance it deviates from the recommen-dations of the Committee, it shall have to state the reasons of deviation to the Committees; this still might possibly dilute the recommendations made by the Committees. This will leave no actual accountability on the part of the government in case it delays or does not implement recommendations made by the Committees. The respective Central and State governments have been vested with the power to appoint staff members as may be necessary. There is a possibility that the respective governments might leave the Commissions either understaffed or with no staff at all. For instance, the Chair-persons of State Human Rights Commissions (SHRC) are appointed by their respective State governments. As of May 1, 2018, there were no chairpersons in 10 SHRCs and posts of members were lying vacant.12 Ideally, this discretion to appoint its own staff should have been left with the Commissions. It would have cut down the time required in recruiting new staff as well as the Commissions would have had a say in the staff strength required for their smooth functioning. See if you can add Section 16(2)

3.3 Part- [C]:

Section 17 of the Bill bars auction of agricultural commodities below the guaranteed remunerative MSP and sets the MSP as the floor price for the auction. This provision penalises any form of collusion or rigging which leads to control the sale or price or trade of agricultural commodities. For the successful implementation of the Bill, Section 18 makes it mandatory for the government to open procurement centres across the country. In its report, the CACP had recommended that the farmers in the remote areas of the country do not have access to the regulated wholesale markets. This leads to sale of agricultural commodities in local markets at much lower prices as compared to the MSPs.

Section 18 addresses this problem by making it mandatory for the government to open procurement centers. The provision provides a time-limit of four weeks prior to the beginning of harvest of a particular crop to set up the procurement centres. This can be done directly or through designating procurement agencies, SHGs, traders groups etc. In addition to all the steps the government takes, it will have to ensure that the benefits of the MSP reach small and marginal farmers who until now have been deprived of these benefits.

3.4 Part- [D]:

Chapter VII of the Bill provides for Grievance Redressal and Compensation. Section 27 stipulates compensation to any farmer who has not been paid by the trader ‘the guaranteed MSP’. This provision sets the bare minimum of the compensation amount to be the difference between the Guaranteed Remunerative MSP and the price obtained by the farmer. Sub-section 2 of Section 27 provides redressal to farmers who fail to receive instant direct payment that shall fully cover the total value of the commodity sold at MSP. In this case, the compensation amount has been fixed at 15 per cent on the total payment due from the buyer for every month of delay.

In order to ensure speedy grievance redressal, the Bill sets up three-member grievance redressal committees at the Block level. This localisation of grievances committee shall ensure speedy and cost-effective redressal of famers’ grievances. The Committee has been mandated to resolve each complaint within one month of receiving it. The Committee shall be under the administrative control of the State Commission.

However, the Bill does not establish any appellate grievance redressal body. Nor does it clarify if State Commissions will play the role of appellate bodies along with administrative control. Two private members bills, establishing a National Tribunal for produce price fixation,13 and a commission for welfare of farmers,14 have been introduced in the Lok Sabha.

But, instead of having two separate bills with the objective of addressing the grievances of farmers in two different domains, an umbrella body can be established for this purpose. This umbrella body can be conferred with appellate powers to address issues emanating from local grievance redressal bodies as contemplated in this Bill. Conferring appellate powers with this umbrella body shall also reduce the burden on High Courts which are struggling with docket explosion.

4. Conclusion

In the 1960s, the Green Revolution made a lot of positive impact in the agricultural sector and with modern methods of farming the crop yield increased significantly. The government after the Green Revolution worked on establishing a channel directly linking the government and farmers, so that the farmers get the MSP for their crops. However, the farmers in very remote areas still do not have access to regulated wholesale markets and because of this they end up selling their crops at local markets at rates lower than the government announced MSPs. In fact as per a research it has been found that only 9.14 per cent farmers are aware of the MSP of crops.15 And only six per cent of farmers in India are able to get the MSP for their crop, the rest sell their crops at a price lower than the government stipulated MSP.16 In such a situation, there is a clear need for providing a safeguard mechanism to protect the farmers from getting exploited. The Bill not only intends to provide a statutory remedy to the farmers but also makes the MSP applicable to all the crops.

A contrary viewpoint also exists which suggests that the Bill will have ramification on the rate of inflation. As the Reserve Bank of India suggested, the recent increase in the MSP is 20-25 per cent higher than that of the previous year, which would have direct effect on the inflation and would affect the economy in the long run. However,the commodities whose MSP has been announced have a total weight of less than four per cent in the WPI and seven per cent in the CPI. Hence the impact on the inflation, even if any, would be limited.17 Also, the Bill needs to be reviewed on one aspect as it has vested very little power at the hands of the Committees established under the Bill. Actual power to take decision still vests with the government. Whether the Bill would fulfil its objective or not remains to be seen.


1. American Poet Edwin Markham’s poem “The Man with the Hoe”, quoted in Dr Ganesh Upadhyay v. Union of India and Ors, Writ Petition (PIL) No.105 of 2017.

2. The Print, Yogendra Yadav, “What the finance minister can do in Budget 2018 if he wants to raise farmers ’incomes”, https://theprint.in/opinion/finance-minister-budget-2018-raise-farmers-incomes/32180/.~

3. Dr Ganesh Upadhyay v. Union of India and Ors, Writ Petition (PIL) No.105 of 2017.

4. Ministry of Agriculture, Commission for Cost and Prices, “Price Policy for Kharif Crops 2018-19”, https://cacp.dacnet.nic.in/ViewReports.aspx?Input=2&PageId= 39&KeyId=615.

5. The Wire, Sandeep Pandey and Rudra Deosthali, “A Minimum Support Price for Farmers Should Be Made a Legal Right”, https://thewire.in/agriculture/farmers-minimum-support-price-legal-right.

6. Olga Tellis v. Bombay Municipal Corporation, AIR 1986 SC 180.

7. Maneka Gandhi v. Union of India, AIR 1978 SC 597.

8. Dr Ganesh Upadhyay v. Union of India and Ors, Writ Petition (PIL) No.105 of 2017.

9. Ministry of Agriculture, National Commission on Farmers, “Saving Farmers and Saving Farming”, http://agricoop.gov.in/sites/default/files/NCF per cent 20Report-01.pdf. 

10. Section 8 of the Bill.

11. Section 10 and Section 15 of the Bill.

12. The New Indian Express, “Vacancies in state human rights commissions: Supreme Court notice to Centre”, http://www.newindianexpress.com/nation/2018/may/01/vacancies-in-state-human-rights-commissions-supreme-court-notice-to-centre-1808877.html.

13. The National Agricultural Produce Price Fixation Tribunal Bill, 2018.

14. The National Commission for Welfare of Farmers Bill, 2018.

15. Asia and the Pacific Policy Studies, K.S. Aditya, S.P. Subash, K.V. Praveen, M.L. Nithyashree, N. Bhuvana, and A. Sharma, “Awareness about Minimum Support Price and Its Impact on Diversification Decision of Farmers in India”, https://onlinelibrary.wiley.com/doi/full/10.1002/app5.197.~

16. Supra 3.

17. The Economic Times, Joel Rebello, “MSP hike may weigh on RBI’s inflation forecast, push up rates”, https://economictimes.indiatimes.com/news/economy/indicators/msp-hike-may-weigh-on-rbis-inflation-forecast-push-up-rates/articleshow/64877501.cms.

The authors are 5th Year students, B.A. LL.B (Hons.), Dr Ram Manohar Lohia National Law University, Lucknow.

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