📰 Cess pool
The Centre must keep the faith of Parliament, States and the people, and stop misusing cess
•The latest audit of the Union Government’s accounts tabled in Parliament this week reveals that the Finance Ministry quietly retained over 40% of all cess collections in 2018-19 in the Consolidated Fund of India (CFI). As many as 35 different cesses, levies and charges yielded Rs. 2.75-lakh crore in the year, but just around Rs. 1.64-lakh crore was remitted to the specific reserve funds for which these cesses were levied. This not only helped understate India’s revenue and fiscal deficit numbers but also meant that the purposes for which Parliament approved such cesses — be it health, education or infrastructure development — were not met. The CAG of India has, not for the first time, urged the Finance Ministry to take immediate corrective action. Over 10 years, not a paisa of the Rs. 1.25-lakh crore of cess collected on crude oil was transferred to an oil industry development body it was meant to finance. Part of the hefty cess collected as additional excise duties on petrol and diesel, ostensibly to finance roads and infrastructure, was similarly retained in the CFI. The GST Compensation Cess, over which the Centre and several States have now locked horns, was not spared either, with Rs. 47,272 crore not remitted to its rightful account over the first two years of GST. Worse, compensation cess transfers to States were accounted as Grants-in-aid to States, distorting the Centre-States fiscal math.
•A new 4% Health and Education Cess on income tax was partly deployed towards education, but no fund was created for health. Ditto with a Social Welfare surcharge levied on customs. None of these lapses can be considered inadvertent. It is no secret that the Centre’s reliance on cesses and surcharges to raise revenue has increased significantly since the States’s share of the divisible pool of taxes was raised to 42% in line with the 14th Finance Commission’s suggestions. Cess receipts are not part of this pool and though it is arguable whether such levies are in sync with a nation trying to simplify its tax regime, their intended use to fund specific public spending needs serves as an acceptable rationale, provided it is adhered to. With a climate of distrust hovering over India’s federal polity — be it over the GST compensation dispute or the passage of Farm sector Bills without taking States on board — it is critical for the Centre to rebuild bridges. Cesses, starting with the excise duties on petrol and diesel, need to be rationalised, even if just to provide succour to a citizenry whose incomes and job prospects have been pummelled by the pandemic and a shrinking economy. Finally, absolute transparency is needed in the management of cess receipts so that Parliament and the people do not need to wait for audit findings to learn of this subterfuge.
Far-reaching in effect, the new labour codes require greater deliberation
•Some laws are far too important and have far too much impact on the people to be passed in haste or without sufficient deliberation. The three codes aimed at consolidating diverse labour laws and ushering in reforms fall in this category. The codes were passed in both Houses after a limited debate and in the absence of the Opposition. The Industrial Relations Code, the Social Security Code and the Occupational Safety, Health and Working Conditions Code, 2020, are an updated version of the respective Codes of 2019, which were scrutinised by a Standing Committee. Therefore, there is considerable merit in the argument that the fresh drafts, introduced a few days before their passage, ought to have been sent back to the panel for an assessment. It is significant that the most contentious feature — the increase in the threshold for an establishment to seek government permission before closure, lay-off or retrenchment from units that employ 100 workers to 300 — was not found in the 2019 draft, but has been introduced now. This gives establishments greater freedom in their termination and exit decisions. No one disagrees with the basic objective of amalgamating, simplifying and rationalising labour laws. However, the very fact that it involves a voluminous body of legislation should have meant that the final version was widely discussed with the stakeholders, and given sufficient time and opportunity to give their views.
•The root of the idea of consolidated labour codes goes back to the June 2002 report of the Second National Commission on Labour. The broad vision has been to give an impetus to economic activity without adversely affecting the interests of workers. Whether this is adequately reflected in the new provisions will be tested by the experience of administering the Codes. A positive feature is that the Social Security Code promises the establishment of social security funds for unorganised workers, as well as gig and platform workers, and also says their welfare would be addressed by the National Social Security Board. A contentious section allows the appropriate government to exempt any new factory from all provisions of the Code on occupational health, safety and working conditions. The threshold for considering any premises as a factory has also been raised from 10 to 20 workers without the use of power, and from 20 to 40 with power. It is significant that almost all major trade unions are opposing the new codes. This reflects a genuine fear that expansive powers of exemption have been conferred on the respective governments and there has been excessive delegation of rule-making powers. The threshold for lay-offs, as well as for various social security schemes can be raised by executive order; safety standards can be changed. There is much reason to fear that conferring wide discretion to the central and State governments may not be conducive to the interests of workers.
📰 Parliamentary scrutiny on the back burner
Data show that the government is losing sight of Parliament’s primary role — discussion and reconsideration
•There must be triumphant laughter in the resting places of those who argued in the 1940s that India is not suited for parliamentary democracy. Their reasons varied from the political culture to the proverbial social diversity of India, or even the Gandhian idea of swaraj that were construed as not easily amenable to forge representative institutions characteristic of parliamentary democracy.
Providing the lead
•At the same time, there were others who forcefully defended the appropriateness of parliamentary democracy for India on grounds of representativeness, responsiveness and accountability. They argued that the wielders of power have to continuously demonstrate their responsiveness to public interest on a day-to-day basis in this dispensation; that even a small minority can play a significant role, and that those who wield public power would be subject to a close audit of their actions at the level of their constituencies.
•There is a running thread across the Constituent Assembly Debates that Parliament at the Centre and legislatures in the States would be the key institutions around which parliamentary democracy in India would revolve. While the State legislatures in India have tended to largely imitate Parliament, without evolving an institutional culture of their own to this end, much rested on Parliament to provide a lead in this regard. While there were a few buds of hope in this regard at times, they seem to be withering far too early.
Committee system
•Over the years, the Indian Parliament has increasingly taken recourse to the committee system (as its counterparts did elsewhere). This was not merely meant for house keeping, to enhance the efficacy of the House to cope with the technical issues confronting it and to feel the public pulse, but also to guard its turf and keep it abreast to exercise accountability on the government.
•Some committees such as the Estimates Committee and Public Accounts Committee (that even go back to the colonial period) have a commendable record in this regard. The executive in independent India, irrespective of the parties in power, was not very disposed to committees of scrutiny and oversight, sometimes on the specious plea that they usurped the powers of Parliament. This was far from the case. They were guardians of the autonomy of the House: the committees of scrutiny and oversight, as the case with other committees of the House, are not divided on party lines, work away from the public glare, remain informal compared to the codes that govern parliamentary proceedings, and are great training schools for new and young members of the House. In the discharge of their mandate, they can solicit expert advice and elicit public opinion. The officialdom in India has often attempted to take cover under political masters to avoid the scrutiny of committees. Besides the standing committees, the Houses of Parliament set up, from time to time, ad hoc committees to enquire and report on specific subjects which include Select Committees of a House or Joint Select committees of both the Houses that are assigned the task of studying a Bill closely and reporting back to the House.
Some faultlines
•While there is much to commend about the routine working of the parliamentary committee system in India, it has not been creative or imaginative. The presiding officers of the Houses who had to give up leadership in this regard have tended to imitate changes and innovations done elsewhere (such as in Britain). The chairman of the Rajya Sabha, being the Vice-President of India, cannot probably distance himself much from the stance of the Cabinet, but even when it comes to the Lok Sabha, very few Speakers, with exceptions such as G.V. Mavalankar, P.A. Sangma and Somnath Chatterjee, have taken cudgels with their party leaders to uphold the autonomy of the House.
•However, ground was broken in 1993 when 17 Committees (later increased to 24) of Parliament, the Departmentally-related Standing Committees (DRSCs), drawing members from both Houses roughly in proportion to the strength of the political parties in the Houses, were set up.
•They were envisaged to be the face of Parliament in a set of inter-related departments and ministries. They were assigned the task of looking into the demands for grants of the ministries/departments concerned, to examine Bills pertaining to them, to consider their annual reports, and to look into their long-term plans and report to Parliament.
A gradual marginalisation
•It is important to point out that committees of scrutiny and advice, both standing and ad hoc , have been confined to the margins or left in the lurch in the last few years. Data by PRS India brings this out eloquently. While 60% of the Bills in the 14th Lok Sabha and 71% in the 15th Lok Sabha were wetted by the DRSCs concerned, this proportion came down to 27% in the 16th Lok Sabha.
•Apart from the DRSCs, the government has shown extreme reluctance to refer Bills to Select Committees of the Houses or Joint Parliamentary Committees. The last Bill referred to a Joint Parliamentary Committee was The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Second Amendment) Bill, in 2015. Some of the most momentous Acts of Parliament in recent years such as the radical overhaul of Article 370 that revoked the special status of Jammu and Kashmir and divided the State into two Union Territories were not processed by any House committee.
•Given their large-scale implications and the popular protests against them, the three Bills related to agricultural produce and the three labour Bills that overhauled conditions of work, terms of employment, grievance redress and social security in the monsoon session of Parliament were cases that definitely deserved to be scrutinised by Select Committees of the Houses. But the government used its majority in both the Houses of Parliament and steamrolled the Bills (with hardly any discussion), amid the predictable din and noise that a fragmented Opposition could mount.
Setting aside a culture
•There is no dearth of scholarly literature to suggest that the committee system has greatly enhanced the capacity of Parliament to carry out its mandate. So, why has the ruling dispensation neglected this?
•One of the reasons given at this point in time is the novel coronavirus pandemic and the urgent need to enact safety measures. The argument of urgency seems spurious given the fact that some of the most controversial Bills introduced in the House, such as relating to labour and the farm sector, were vehemently opposed by the groups concerned and clearly aimed at market reforms. If it is urgency, then the Women’s Reservation Bill, on which there was a broad consensus in the House, should have come up upfront.
•Clearly, this regime is not disposed to a reflection and reconsideration of Bills proposed in the House. It does not seem to believe that the primary role of Parliament is deliberation, discussion and reconsideration, the hallmarks of democratic institutions, but a platform that endorses decisions already arrived at. Further, what is ominous is the encroachment into the powers of a State that some of these bills reflect, and the reinforcement of the central authority they portend.
📰 Sowing seeds of doubt
Farmers in Punjab are worried about the implications of the three new farm bills that will allow them to sell their produce directly to private players.Vikas Vasudevareports on the concerns of farmers, commission agents and workers despite the government’s assurances that the legislation empowers them
•In June 2020, 55-year-old Shingara Singh in Fatehpur village in Patiala, Punjab, sold his spring season maize crop at Rs. 700-Rs. 800 per quintal, far below the Minimum Support Price (MSP) of Rs. 1,850/q fixed by the Central government for the season’s crop. He says private traders buy the produce at a much lower price than the MSP.
•In the upcoming Rabi (winter) season, Shingara is hoping to get a remunerative price for his wheat crop. In Punjab and Haryana, the Central government purchases wheat and paddy (rice) at the MSP, which gives farmers an assured market and return. But Shingara is worried that following the passage of the farm bills in Parliament last week, even wheat and paddy will face the same fate that crops that are not purchased by the government agencies of the State or the Centre face.
•The Central government says the three bills — the Essential Commodities (Amendment) Bill, the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, and the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill — are aimed at transforming agriculture in the country and raising farmers’ income. The provisions of the bills, it says, will enable barrier-free trade in agricultural produce and empower farmers to engage with investors of their choice.
‘I can’t trust private players’
•But farmers are not convinced by the government’s promises. In both Punjab and Haryana, farmers are up in arms against the three farm bills. They fear that they are a step towards abolition of the MSP regime, leaving farmers to suffer possible exploitation at the hands of big corporate houses. And the fear is not limited to any one group of farmers; it is shared by marginal, small and large/ other farmers. While marginal farmers (those cultivating upto two and a half acres of land) and small farmers (those cultivating upto five acres) fear that they will be completely pushed out of agriculture, large farmers (cultivating over five acres) feel they may be able to ride it out for a few years, but will eventually find it difficult to stand up to multinational corporations and big traders.
•Shingara is wary of dealing with private companies. His fear is rooted in his experience of trading with a company. He started sowing barley crop around eight years ago after a liquor manufacturing company near his village offered to buy his crop. “The company makes beer. People from the company came to our village and wanted us farmers to cultivate barley. They said the company would purchase our produce at a higher price than the MSP. Initially, for two-three years, they did pay us Rs. 400 above the MSP. But later, when several farmers started sowing the crop and supply increased, they were reluctant to buy the produce at that assured price. On the pretext of quality, they either rejected the produce or paid us a lower price. After 2015-16, I stopped cultivating barley,” he says.
•Dilbag Singh, 44, another farmer from the same village, who has over 15 acres of family land, speaks of a similar experience that left him poorer. “A local pea processing industry asked me to plant green peas. In 2012, representatives of the company approached me and said they would pay Rs. 8.5 per kg. They prepared some documents as well. I planted the crop. When the crop was ready, I took a tractor trolley with around 100 bags (50 kg each) of produce to their unit, but they were unwilling to buy my crop citing poor quality. It was only after the intervention of local farmer outfits that they purchased my crop. Later, I sold the rest of my crop that I had sown in five acres of land at Rs. 2-Rs. 3 per kg in the local mandi (market place). I had to bear heavy lossses,” he says. “I can’t trust them anymore.”
•The story is no different in other parts of the State. In Tibba Tapprian village in Rupnagar district, Dharmpal Singh, who owns close to three acres of land, says he sold 25 quintals of maize crop at Rs. 800/q at the Balachaur mandi a few days ago. “The government announces the MSP, but what’s the use if I have to sell my crop below the MSP? Government agencies should buy farmers’ produce at the MSP or make it legally mandatory for private traders to purchase crop at the MSP,” says the 56-year-old.
•A senior government official points out that the government did not intervene as maize is not distributed under the Public Distribution System (PDS). “Government purchases only those crops that are distributed under the PDS. Maize is not among those crops,” says Gurvinder Singh, Joint Director at Punjab’s Agriculture Department.
•Surjit Singh, 65, fears that mandis under the Agricultural Produce Market Committee (APMC) will gradually vanish if private trade is allowed without any government regulation. “Trade within the mandi through the arthiya (commission agent) is taxable, which includes rural development fee, market fee and the commission of the agent. But after these bills, no taxes will be levied on trade outside the regulated mandis,” he says. “That means private traders and companies can offer a higher price to farmers as they won’t have to pay tax. Once they start offering a better price to farmers than what is offered in the mandis, it is but natural that farmers will be inclined to sell their produce to them. And over time, with trade outside the mandis growing, the mandis will eventually disappear. As I stand against the new bills, I have decided I’ll sell my crop of Basmati rice only through the mandi. But for how long will I be able to do this? I can negotiate with private traders or companies to some extent because I have better resources than the small and marginal farmers (he owns over 25 acres of land in Patiala’s Lachkani village). Yet, against the big corporate houses, it will be a losing battle,” he says.
A strong, age-old bond
•While the government says farmers can now trade anywhere, Gurmukh Singh, 47, asks how that will be possible as they cannot afford the hefty transport costs. Gurmukh is a small farmer with around four acres of family land in Lachkani village. He has sown paddy in his field. With hardly any resources to store or transport his produce, he is extremely worried. “Once I harvest my crop, I sell it at the local mandi. Even if I get a higher price from private traders in some faraway place, it won’t be easy for me take my produce there. I do not have the capacity or resources to trade my crop at distant places. So, even if the bills promise us the freedom to sell anywhere, it seems a distant dream in practice,” he says.
•“Moreover”, he adds, “I can’t leave my commission agent for private traders. The relation with my arthiya goes back generations. Whenever I am in need, I get money from him. He pays me in advance for the crop that is to be harvested. Such a relationship based on trust will be difficult to establish with private traders or companies.”
•In Patiala’s Ranbirpura village, Avtar Singh, who owns two and a half acres of land, is equally grateful to his commission agent. “I have already taken an advance of Rs. 1 lakh from him for the paddy crop that I had planted this season. It would have been next to impossible for me to cultivate my farm if my arthiya had not given me the advance. He gave me an advance only because he is assured that my paddy crop, which I’ll sell through him, will be purchased by government agencies at the MSP. If the government stops purchasing paddy or wheat at the MSP, I don’t think I’ll be able to cultivate any crop on the farm. No one will give me an advance or offer any financial help without a tangible guarantee,” he says.
•Avtar fears that once the parallel private market starts functioning outside the regulated market, there will eventually be no MSP in that market. “The government should come out with another bill making MSP a statutory right of the farmers,” he says.
•Commission agents and labourers working in grain markets have their own concerns about the new bills. “The government has announced the MSP for several crops but it is only for wheat and paddy that farmers actually get the MSP. And that’s because the government buys it. For instance, this year, government agencies purchased wheat at an MSP of Rs. 1,925/q during the official procurement. But now, after government purchase, the wheat is being bought by private traders at Rs. 1,600/q-Rs. 1,650/q in the mandi here. The government, it seems, wants to remove us from the market,” says Mulk Raj Gupta, president, Arthiya Association, Patiala new grain market. “But they possibly don’t realise how many people are generating employment in this entire chain, be it labourers, staff at shops, employees of market committees or others,” he says.
•In the grain market, Badri Mukhiya, 45, who hails from Bihar, ropes in labourers from his State. He says he has been coming to Punjab since 1990, but is now worried after hearing that work at the mandi could reduce. Work includes loading and unloading of produce and cleaning of grain. “If farmers stop coming to the mandi altogether or even if fewer farmers come, there will be less work. The livelihood of at least 20 people and their families who are associated with me is dependent on the work we do here. We earn around Rs. 400 a day, but we will have to return to our native place if there’s no work. Everyone is worried,” he says.
Concerns and responses
•Agricultural experts have expressed their reservations about the bills as well. Lakhwinder Singh, Professor of Economics and Coordinator at the Centre for Development Economics and Innovation Studies at Punjabi University, Patiala, has been mapping rural Punjab for decades. He says these bills have generated a lot of suspicion as they were passed through the ordinance route. “The new bills state that the foodgrain trade will be in the hands of private traders. But no safeguards have been enacted. The majority of farmers in India are small and marginal farmers. They usually wait for the crop to be harvested in order to fulfil their basic needs. They don’t have the capacity to trade the food at distant places. Therefore, the claim that farmers will have the freedom to sell does not hold true. Giving private players the freedom of foodgrain trade without any regulation will eventually lead to the emergence of monopolies, oligopolies or a cartel system,” he says.
•Noted economist and professor at the Ludhiana-based Punjab Agricultural University, Sukhpal Singh, points out that 86% of Indian farmers have less than five acres of land, and 67% of farmers have less than two and a half acres of land. “These are the victims of the grave economic crisis. How can these small farmers sell their produce in other markets? What is the purpose of new markets if small farmers cannot participate in them? How will the new private markets operate? These new markets will not have any regulation and they won’t be taxed by the State government. State governments will regulate only the already running markets. In Punjab, for instance, these markets levy 8.5% tax, including 3% market fee, 3% rural development fund, and 2.5% commission of the commission agents. Thus this year, the tax is around Rs. 155/q on paddy and about Rs. 164/q on wheat. This means that due to non-tax on private purchase, the purchase of paddy and wheat will be cheaper for private buyers to the extent of Rs. 155-Rs. 164/q. Initially, even if private markets offer farmers Rs. 55/q-Rs. 64/q on paddy and wheat purchases, they (private traders) would still get a profit of Rs. 100/q. Government procurement will be affected as farmers will be inclined towards private markets. As the volume of purchase increases in the new system, the government will reduce its purchase target. Gradually, government procurement will be negated. In such a situation, the prices of crops in private markets will be reduced,” he says.
•In response to all these concerns, Prime Minister Narendra Modi said in a series of tweets in English, Hindi and Punjabi that MSP will continue. “Government procurement will continue. We are here to serve our farmers. We will do everything possible to support them and ensure a better life for their coming generations,” he tweeted. He added the government was bringing in these provisions as middlemen have been bullying farmers for years.
•Union Agriculture and Farmers Welfare Minister Narendra Singh Tomar has also tried to allay fears. He said the APMC system will continue. Alleging that the Opposition was trying to mislead the country, Tomar said, “Farmers, so far, were forced to sell their produce in mandis. In Punjab there’s 8.5% tax in the mandis on several items. Now, through these bills, the farmers will be able to sell their produce even outside the ambit of the mandi.”
•The distance between traders and farmers will reduce now, Tomar told Parliament. “If a trader will visit a village, farmers of that village will assemble at one place to sell their produce. [The] trader will fix the rate of purchase after discussing with farmers. The trader will purchase the produce and take that away in a truck. Farmers will not have to go anywhere to sell their produce,” he said.
Playing politics over the bills
•Despite the government’s assurances, concerns persist, and not only among the Opposition parties. After initially supporting the ordinances pushed by the National Democratic Alliance government, Shiromani Akali Dal, an old alliance partner of the Bharatiya Janata Party, decided to take a U-turn on the issue. The Akali Dal’s lone representative in the Union Cabinet, Harsimrat Kaur Badal, quit the Cabinet in protest against the bills. In her resignation letter to the Prime Minister, Badal wrote, “In view of the decision of the Government of India to go ahead with the Bill on the issue of marketing of agricultural produce without addressing and removing the apprehensions of the farmers and the decision of my party, Shiromani Akali Dal not to be a part of anything that goes against the interests of the farmers, I find it impossible to continue to perform my duties as a minister in the Union Council of Ministers.”
•The Akali Dal has also accused the Congress government in Punjab of “double speak” on the issue. The Congress government in 2017 amended the State APMC Act after coming to power in Punjab to include provisions similar to those in the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020, the Akali Dal claimed. According to the State Act, trade can be done only after obtaining a licence from the government in its mandis under the Punjab Mandi Board or the private mandis. However, according to the Centre’s new farm bills, no licence from the State government is required; any PAN card holder can engage in trade. Besides, no private or government mandi is required for trade under the new farm bills. Trade can be done outside the physical premises of markets or deemed markets notified under various State agricultural produce market laws.
•The ruling Congress party, on the other hand, accused the Akali Dal of misleading people on the farm bills and asked the party to part ways with the NDA. Chief Minister Amarinder Singh said that the Akali Dal’s claims of standing shoulder to shoulder with the farmers are hollow as long as it remains a part of the Central government.
•In neighbouring Haryana, Deputy Chief Minister Dushyant Chautala, whose Jannayak Janta Party is part of the coalition government with the BJP, has made it clear that while there’s no mention of doing away with the MSP in the farm bills, he will quit if the MSP is indeed discontinued. That leaves a question mark on the alliance.
•While parties spar with one another, farmers are concerned about the present. On September 25 afternoon, hundreds of angry farmers sat on the Amritsar-Delhi national highway at the Shambhu border of Punjab-Haryana, protesting against the bills. Jasbir Singh, 55, who owns two and a half acres of land in Kutha Kheri village in Patiala’s Rajpura Tehsil, says he has enough cash in hand to undertake farming operations. “But after harvesting my paddy crop, I’ll be needing money for sowing wheat in my field. It’s only my arthiya who will give me an advance. If mandis go redundant and arthiyas go away, how will I sustain myself? I am under a debt of about Rs. 2.5 lakh. I don’t think I have a choice but to sell my land,” he says as he drops his head in despair.
