Monsoon session of Parliament: All you need to know about the Essential Commodities ordinance
- The amendment to the
Essential Commodities Actwas introduced as a part of the slew of reforms that Finance Minister Nirmala Sitharaman introduced in May 2020 as relief measures for COVID-19 pandemic.
- Through the amendments, better price realisation will be made possible for
farmersand cereals, edible oils, oilseeds, pulses, onions and potatoes will be deregulated.
Introduced as a part of the slew of reforms that Finance Minister Nirmala Sitharaman introduced in May 2020 as relief measures for the COVID-19 pandemic and the ₹20 trillion stimulus package, the government had said it was a landmark decision which would help India’s farmers. The amendment was a step towards creating ‘One India, One
The Essential Commodities Act (ECA) was passed by the Union Cabinet in June and is now an
Amendments to the Essential Commodities Act
Through the amendments, better price realisation will be made possible for farmers and cereals, edible oils, oilseeds, pulses, onions, and potatoes will be deregulated.
Stock limits will be imposed only under exceptional circumstances like national calamities, famine with a surge in prices. No such stock limit shall apply to processors or value chain participants, or any exporter subject to export demand.
According to PRS, a stock limit may only be imposed if there is: (i) a 100% increase in the retail price of horticultural produce; and (ii) a 50% increase in the retail price of non-perishable agricultural food items.
What is referred to as Essential Commodity?
Currently, essential commodities are defined as per the schedule within the act. The schedule entails drugs (fertilisers – inorganic, organic or mixed), petroleum and petroleum products, food products, raw jute and jute textiles, seeds of food crops, fruits, vegetables, and cattle fodder, jute seed, cottonseed.
During this COVID-19 pandemic, face masks and hand sanitizers were added to the list. This was due to the scarcity of the products, and as there were cases of a price increase. However, deeming them essential the government notified that their prices cannot be increased. The notification was in force until June 30, and the two items aren’t classified as essential anymore, once the availability in the market improved.
What is the Essential Commodities Act initially implemented in 1955?
The act was brought into place for the control of the production, supply and distribution of, and trade and commerce, in certain commodities.
The act then allowed the government of India to control the price of essential commodities, and also decide to increase or decrease the supply of the product in the market. It also gives the government to regulate through licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of any essential commodity.
However, in recent years the Essential Commodities Act has come under a lot of debate. It has also been called ‘ draconian’ by certain sections as it gives the government complete control.
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