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India's Modi defends new law as critics warn of risks to farmers

NEW DELHI/MUMBAI (Reuters) - Indian Prime Minister Narendra Modi defended new laws aimed at lifting restrictions on farmers on Friday after protests by opposition parties, some farming bodies and even an ally of his Bharatiya Janata Party.

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India’s lower house of parliament on Thursday passed three emergency executive orders issued in June by Modi’s cabinet which were targeted at reforming the antiquated Agriculture Produce Marketing Committee (APMC) Act.

This includes a rule that forces growers to sell their produce only at India’s more than 7,000 regulated wholesale markets and Modi said the new legislation would “unshackle” millions of farmers and help them get better prices.

“It will also remove middlemen and let farmers sell their produce directly to buyers,” Modi said.

Many farmer organisations oppose the legislation because they say that if big buyers start buying directly from producers, small growers will hardly have any bargaining power.

“The APMC Act forces every buyer to come to wholesale markets, which is designed to help farmers get competitive, assured and timely payments,” Dharmendra Malik, a farm leader from Uttar Pradesh, India’s most populous state, said.

If big institutions start purchasing directly from farmers, state governments will lose out on the tax that these buyers have to pay at wholesale markets, Malik said.

“The current system ensures that farmers are paid immediately after selling their crop in the market yard itself. If farmers sell outside, who will ensure that they are paid the promised price?” a Maharashtra state official said.

Modi has said that the wholesale markets will operate as usual as the APMC Act has not been abolished and that farmers are simply being given an option to sell directly to buyers.

But Sudhir Panwar, chief of farmers’ group Kisan Jagriti Manch, said if large buyers are allowed to buy directly from farmers, wholesale markets would gradually disappear.

India’s food processing minister Harsimrat Kaur Badal resigned on Thursday, calling the legislation “anti-farmer”.

Badal’s Shiromani Akali Dal party is a BJP ally with a strong base in Punjab, one of India’s two bread basket states, where farmers form an influential voting bloc.

Reporting by Rajendra Jadhav in Mumbai and Mayank Bhardwaj in New Delhi; Editing by Alexander Smith

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