Were the three Farm Laws right for Indian agriculture?

In September 2020, Parliament passed three farm laws: the Farmers' Produce Trade and Commerce (Promotion and Facilitation) Act, the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, and the Essential Commodities (Amendment) Act. They allowed farmers to sell outside the regulated mandi system, enter into contract farming agreements with private buyers, and freed several agricultural commodities from stock limits.

A sustained farmers' protest, centred in Punjab and Haryana and lasting over a year, ended when Prime Minister Modi announced their repeal in November 2021. The laws never came into force. The debate over whether they were good policy remains live.

Indian agriculture is governed by Agricultural Produce Market Committee (APMC) laws, which require most produce to be sold through regulated mandis where licensed traders buy from farmers. The system provides price discovery and some transparency, but critics argue the mandi monopoly keeps farmers' gate prices low, encourages middlemen, and prevents direct farm-to-retail chains from developing.

The laws drew directly on recommendations from the Shanta Kumar Committee (2015) and earlier NITI Aayog reports. Several states, including Madhya Pradesh, Rajasthan, and Karnataka, had already amended their APMC acts in similar directions. The central government's choice to legislate on an essentially state subject (agriculture) through central law was itself a federal concern.

• Farmers would gain the freedom to sell anywhere, not just mandis, allowing better price discovery and direct deals with processors and retailers.
• Contract farming with guaranteed prices could reduce income volatility for smaller farmers.
• Most economists and agricultural economists supported the reforms in principle as addressing long-standing market distortions.

• Punjab and Haryana farmers fear private buyers will eventually outcompete mandis, and that once mandis weaken, MSP procurement collapses, leaving them at the mercy of large corporates.
• The laws were passed in Parliament without consultation, committee referral, or state government engagement on a state subject.
• Contract farming protections for the weaker party (the farmer) were seen as insufficient against large agribusiness.

Agricultural market liberalisation is broadly the global norm in developed economies: the EU's Common Agricultural Policy and the US farm bill both moved from price controls toward direct income support and open markets over the past 30 years. But those transitions were managed over decades with large compensatory payments and strong rural welfare nets. India's reform attempted a faster shift in a sector where roughly 45% of the workforce is employed and safety nets are weaker.

Most mainstream economists continue to think the reforms, or something like them, are necessary. The political lesson drawn was about process: laws affecting millions of farmers should not be passed as money bills in a pandemic session without prior consultation. Whether the next attempt succeeds depends on whether trust with farming communities, particularly in the northwest, is built first.

This moves primarily the Economy axis: backing market liberalisation of agriculture reads as free-market; backing mandi protection and MSP enforcement reads as state-interventionist. It also touches the Nation axis through the federalism question of central vs state agricultural jurisdiction.