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Sunday, April 18, 2021

The Essential Commodities Act explained: Here are 5 things you need to know

It has been advised to "implement the Essential Commodities (Amendment) Act, 2020 in letter and spirit, and without let or hindrances so that the farmers and other stakeholders of the farming sector in this country receive the benefits". Let's see how it fairs in the long run.

A Parliamentary Panel has asked the Central Government to implement in “letter and spirit” the Essential Commodities (Amendment) Act — one of the laws against which farmers have been protesting at Delhi borders for over a hundred days now. But why is there an amendment in the Act? What is the Essential Commodities Act 1955? There is a hoard of these questions that came to our mind when we heard the news. Here are the five most important things you need to know about the Essential Commodities Act and its amendment.

Sources at the Ministry of Consumer Affairs, Food and Public Distribution recently said that an ordinance has introduced a new subsection (1A) in Section 3 of The Essential Commodities Act, 1955. The amended law provides a mechanism for the “regulation” of agricultural foodstuffs, namely cereals, pulses, oilseeds, edible oils, potato, and supplies under extraordinary circumstances, which mostly include extraordinary price rise, war, famine, and natural calamity of a severe nature.

This panel, which asked the government to implement the Essential Commodities Act also has members from opposition parties including Congress, TMC and AAP. These parties have been demanding the scrapping of the three farm laws enacted by the Centre recently. In its report tabled in the Lok Sabha on March 19, the Standing Committee on Food chaired by TMC leader Sudip Bandyopadhyay recommended the government to “implement the Essential Commodities (Amendment) Act, 2020 in letter and spirit, and without let or hindrances so that the farmers and other stakeholders of the farming sector in this country receive the benefits intended under the said Act”.

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It added that although the country has become surplus in most agri-commodities, farmers have been suffering due to the lack of better prices stemming from the lack of investment in cold storage, warehouses, processing and export as entrepreneurs get discouraged by the regulatory mechanisms mentioned in the Essential Commodities Act, 1955. “This has resulted in farmers suffering huge losses when there are bumper harvests, especially of perishable commodities, much of which could have been reduced with adequate processing facilities,” the panel said. The panel also asked the government to look into the prices of essential commodities and take steps when necessary because commodities such as potato, onions and pulses are part of any commoner’s daily diet and that lakhs of people who do not get the benefits of the Public Distribution System (PDS) might suffer after the implementation of the new Act.

What is the Essential Commodities Act?

As per the universally accepted definition, the Essential Commodities Act (ECA) “is an act of the Parliament of India that was established to ensure the delivery of certain commodities or products, the supply of which, if obstructed due to hoarding or black marketing, would affect the normal life of the people. This includes food, drugs, fuel (petroleum products) etc. This act was modified by the Essential Commodities (Amendment) Act, 2020 as part of the 2020 Indian farm reforms. The ECA was enacted in 1955 and has since been used by the Government to regulate the production, supply, and distribution of a whole host of commodities that it declares ‘essential’ to make them available to consumers at fair prices. Additionally, the government can also fix the minimum support price (MSP) of any packaged product that it declares an essential commodity.”
At present, there are nine commodities on the list—drugs, fertilizers (organic, inorganic or mixed), foodstuffs including edible oil, hank yarn made from cotton, petroleum and petroleum products, raw jute and jute textiles, seeds of food crops, fruits, vegetables, cattle fodder, cotton; and most recently added: face masks and sanitisers. The Act gives powers to the government to add or remove a commodity in the Schedule. The law also prohibits hoarding and black marketing of essential commodities mentioned in the schedule. Section 3(1) of this Act says “…if the Central government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, (or for securing any essential commodity for the defence of India or the efficient conduct of military operations), it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.”

What is the definition of an essential commodity?

There is no specific definition of essential commodities in the Essential Commodities Act, 1955. Section 2(A) states that an “essential commodity” means a commodity mentioned in the Schedule of the Act. The central government has the power to add or remove a commodity as per the Act, while it should do so in the public interest and can also decide after consultation with state governments. By declaring a commodity as essential, the government can control a hoard of things including production, supply, and distribution of that commodity, and also impose a stock limit.

Why has the Act been amended?

When the Act was put to effect in 1955, the country had been facing a severe scarcity of foodstuffs due to low foodgrain production then. It had to depend on imports and assistance from other countries and that’s when to prevent hoarding and black marketing of the essential items, the Act was enacted.
However, the situation seems to have taken a positive turn. India, in fact, now is a major exporter of several agricultural products. A note prepared by the Ministry of Consumer Affairs, Food and Public Distribution shows that “production of wheat has increased 10 times (from less than 10 million tonnes in 1955-56 to more than 100 million tonnes in 2018-19), while the production of rice has increased more than four times (from around 25 million tonnes to 110 million tonnes during the same period). The production of pulses has increased 2.5 times, from 10 million tonnes to 25 million tonnes.” This could be good for the country but will it be good for the farmers who have been protesting this for so long? Only time will tell.

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