2019 – Posted in: Daily News – Tags: Essential Commodities Act

STRUCTURAL REFORM IN AGRICULTURE

For: Mains

Topic cover: Essential Commodities Act – Proposed changes, NITI Aayog

News Flash

NITI Aayog has proposed that the “Essential Commodities Act, 1955” to be scrapped altogether because it is an “impediment in the free movement of commodities” given that the country is now self-sufficient in most.

The act was framed during the era of food scarcity.

The Aayog also wants to scrap “Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities (PBMSEC) Act, 1980”

New Proposal

The proposal has suggested the classification of commodities under the EC Act into two categories:

(a) Priority One — drugs, petroleum/petroleum products, and fertilizers.

(b) Priority Two — foodstuffs and seeds of agricultural produce.

The first category would continue to witness some controls, the second should be “decontrolled” with a caveat that controls “may” be imposed in “exceptional circumstances” like war, severe natural calamities or steep fall in production (over 10 percent dip in a year) or sharp rise in prices (100 percent or more over previous year).

The proposal seeks to do away with the imprisonment provision. It seeks to adopt punishments and monetary penalties.
It proposes the power to impose stock limits and movement restrictions on agricultural commodities. (These can be seen as license-permit raj that creates uncertainty for investors and private capital infusion into the agricultural sector).
It proposes the model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act as well as a separate model Agricultural Produce & Livestock Contract Farming and Services (Promotion & Facilitation) Act seeks to modernize legislation designed at the height of food scarcity and also provides a separate legal framework for contract farming to attract private sector investment.

Government’s Stand

Restrictive and deterring nature of the Essential Commodities Act and its related statutes have ensured that the sector hasn’t witnessed any massive investment despite 100 percent FDI allowed.
If agriculture has to move to the next stage of development, it has to be provided a new kind of environment.
It has to be the private corporate sector. Right now the share of corporate private investment in total investment in agriculture is 2.4 percent.

Essential Commodities Act, 1955

The ECA was enacted way back in 1955. It has since been used by the Government to regulate the production, supply, and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.

The list of items under the Act includes drugs, fertilizers, pulses, and edible oils, and petroleum and petroleum products. The Centre can include new commodities as and when the need arises, and take them off the list once the situation improves.

Why it is important?

The ECA gives consumers protection against irrational spikes in the prices of essential commodities. The Government has invoked the Act umpteen times to ensure adequate supplies. It cracks down on hoarders and black-marketeers of such commodities.

As almost all crops are seasonal, it is ensuring round-the-clock supply requires an adequate build-up of stocks during the season.

Source: Indian Express

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