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Essential Commodities (Amendment) Act, 2020

The Essential Commodities Act was brought in 1955 to stop the foodstuffs hoarding and black marketing, at a time when there is low production of food crops and the nation was suffering from hunger and scarcity.

At that time the point came when we had to rely on imports and assistance especially from the countries like the U.S.A., therefore this act became the need of an hour to stop the hoarding of essential products such as oil-cakes, onion, rice, etc. to fulfill the demand of the citizens.

The term Essential Commodity is defined under Section 2(A) of the Essential Commodities Act, 1955, which means a commodity mentioned or specified in the schedule. Therefore, such 7 commodities are specified in this schedule which are Drugs, Fertilizers, Foodstuffs, including edible oils, Hank yarn, Petroleum and its products, Jute, and Seed of fruits, vegetables, cattle fodder, and jute.

Powers to Central Government
This act gives the power to the center to add or to remove the goods they want according to the demand and supply in the market. They can control the demand, supply, production, distribution, and as well as stock limit of the commodity declared essential.

There are two primary aims of this Act:
  1. To keep up or increase the supply of these fundamental commodities, and
  2. To secure impartial dispersion and accessibility of these essential commodities.
What is the amendment?
Under Section 3 of the Essential commodities act, 1955 the subsection (1 a) was introduced. In this subsection, certain foodstuffs such as onions, cereals, pulses, potato, oils, and edible oil seeds are removed from the list and now these items are not counted in the essential commodity list. The regulation of these foodstuffs can take place but only in extraordinary circumstances. These extraordinary circumstances are war, famine, natural calamity, and extraordinary price rise. Prior, these commodities were not mentioned under Section 3, and reasons for conjuring the section were not specified. Amendment moreover, exempts, certain food (processors, value chain participants) & exporters subject to the constrained ceiling.

Circumstances for imposing a stock limit
In the act of 1955, the clear framework to impose the stock limit is nowhere mentioned. The amendment came with the clauses for stock limiting where the circumstances are mentioned for the government to impose a stock limit. These circumstances are war, famine, natural calamity, and rise in extraordinary price which is termed as price trigger in the clause.

The stock limit imposition portrayed with the charge notices that the stock constrain should be forced on the crops as it were in cases of cost rise up to 100% on agricultural products and 50 % increment within the retail cost of non-perishable agricultural food products, where the increment will be calculated based on the cost patterns winning over the going before 12 months or the normal retail cost of the last 5 years.

Need of a change
The act was legalized at a time in 1955 when the country was suffering from scarcity. But now the situation has changed due to explosive growth in the export of agricultural products.

The amendment leads to free the agricultural market from the limitations imposed by the Agricultural Produce Market Committee (APMC) which will further lead to the freedom to produce, hold, move, distribute and supply. Therefore, strengthening the economics of scale will attract private investments into the agricultural sector.

The stock limit relaxations under the ECA may lead to black marketing and hoarding which will only benefit hoarders but not the farmers and consumers.
It is also said that the price triggers envisioned in the bill are unrealistic which may lead rise in inflation and the monopoly of some individuals over the price of certain goods.

According to the Economic Survey, 2020, India now no longer faces food shortage issues. Also, the food grain production has expanded since the 1950s and India is presently an exporter, thereby giving the act anachronistically.

What is disregarded, in any case, is the population of India increased to 1.3 billion in 2020 from 360 million in 1951. The responsibility of ensuring food security to the masses cannot be shunned as there are more mouths to nourish. Sights of migrants scraping for pieces of nourishment during the COVID-19 crisis continue to haunt.

The overview said 76,000 raids were conducted in 2019 beneath the Essential Commodities Act to prevent violation of stock limits. Also, we cannot ignore the pulses scam where the prices are manipulated in 2015. Income tax department investigation found that several huge MNCs played a major role in seeking prices of pulses. spiking prices of pulses. Thus, the policies must ensure sustainable farm growth taking into consideration factors like farmers' interests, climate change, consumer capacity, and landholdings.

According to my opinion, India needs Agricultural reforms as some statistics said that roughly 60 percent of the Indian population works within the industry, contributing around 18 percent to India's GDP. This share diminishes steadily with each year, with advancement in other regions of the country's economy. Therefore, we need to boost our agricultural sector by working on loopholes so that farmers may attain the full benefit of this act.

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