More farm per farm

One of the biggest pieces of tweaks in legislation was the passage of the Farm Amendment Bill 2020 as well as some key modifications to the all-important Essential Commodities Act. Let us look at some far-reaching changes. The bill offers farmers an alternate platform to sell their produce apart from the APMC Mandi. While the APMCs will continue to function, they now have to compete with these alternate platforms. The PM himself has clarified that the Minimum Support Price or the MSP system will continue as before and backed it up by announcing an MSP hike. However, it is still not clear how the concept of MSP will be applied to the alternate platform. While the Farm Bill seeks to get rid of the Arhatiyas or commission agents, it does not really provide any alternative. In a big shift, the Essential Commodities Act has been amended to remove cereals and pulses from the ambit of the ECA. Not surprisingly, farmers have called it a sell-out to corporate interests. The first test of the new Farm Bill will only be visible when the Kharif output starts coming into the markets around the second week of October 2020.

Banking regulations modified

This replaces the Banking Amendment Act of 2020 and comes with two key changes. Firstly, the RBI is now allowed to initiate the scheme of reconstruction and amalgamation of any bank without placing it under moratorium. This is in sharp contrast to what happened in the case of Yes Bank. In this case, the bank was first placed under moratorium before restructuring was coordinated by SBI. However, in the meantime, the bank saw a huge run on its deposits. That can be avoided. Secondly, the new Bill also envisages bringing most of the cooperative banks under the ambit of RBI regulation. This was long called for, especially after the PMC Bank fiasco last year. It remains to be seen if RBI has the bandwidth for additional regulation. 

Labor Bill changes

This was the most controversial of the 3 major bills. Firstly, it made “Hire and Fire” a lot easier for industry; something that has been a pre-condition of many companies planning FDI into India. No prior permission for closure will be needed for units employing 300 or less persons. The second big change was to make industrial shutdowns difficult but also to expand the social security of gratuity to contract workers. Lastly, in a big boost to gender equality, women will now be allowed to be employed in all types of work, including in night shifts. That surely sets the tone!