Essential Commodities Act of 1955
Source : The Hindu
GS II :  Policies and Developmental Studies;  GS III :  Food and Agriculture 

What is discussed under Essential Commodities Act of 1955?

1. What is Essential Commodities Act of 1955?
2. What is Essential Commodities (Amendment) Bill, 2020?
3. What are the impacts of Essential Commodities Amendments?

Why in News?

With tur dal prices rising, the Centre has invoked the Essential Commodities Act of 1955, requesting states to monitor and verify the supplies available with dealers who create an artificial supply squeeze by restricting sales.

Key Facts

• • States and Union Territories directed stockholder entities to upload the data of stocks held by them on an online monitoring portal of the Department of Consumer Affairs, on a weekly basis. 
  • This will control attempts by some traders and stockists to push the price for tur dal upwards, by resorting to ‘restricted sales’ and creating an artificial scarcity.

What is Essential Commodities Act of 1955?

• • The Essential Commodities Act was enacted to prevent food hoarding and black marketing when the country was suffering food scarcity owing to persistently low levels of food grain production.

    

  • The Act empowers the central government to control the production, supply, distribution, trade, and commerce of certain essential commodities.
  • These essential commodities include drugs, fertilizers, foodstuffs, petroleum products, raw jute, and cottonseed.
  • The government can also fix the minimum support price (MSP) of any packaged product that it declares an essential commodity.
  • In March 2020, the Union Government brought masks and hand sanitizers under the act to prevent the spread of COVID-19 but later removed from the Essential Commodity List.

Issues related to the Act 

• • Based on the recent Economic Survey report, the effort by government missionaries was not successful to restrain inflation in the agriculture commodity sector.
  • The facility to store the extra produce is not utilised by the traders during the surplus harvest, especially for perishable agricultural produce.
  • This led to farmers being unable to get better prices.
  • Because of these concerns, Parliament approved the Essential Commodities (Amendment) Bill, 2020.

Essential Commodities (Amendment) Bill, 2020

• • The Essential Commodities (Amendment) Ordinance, 2020 was implemented on June 5, 2020.
  • Cereals, pulses, oilseeds, edible oils, onion and potatoes are removed from the list of essential commodities.
  • Stock limit can only be imposed if there is a 50% rise in the retail price of non-perishable agricultural foodstuff over the price prevailing in the preceding 12 months or the average retail price of the last five years, whichever is lower.
  • The ordinance states that the action on imposing stock limits will be based on the price, if the retail price of: 
    1. Horticulture produce increases by 100%
    2. Non-perishable agricultural food goods increases by 50%
  • The ordinance allows the government to regulate the supply and prices of certain commodities only under extraordinary circumstances such as:
    1. War
    2. Famine
    3. Extraordinary price rise
    4. Natural calamity of grave nature
  •  If a stock limit is imposed, it will not apply to a processor or value chain participant or exporter.

Impact of Essential Commodities Amendments

• • Cereals, pulses, oilseeds, edible oils, onions, and potatoes will be removed from the list of regulated essential commodities.
  • The move is likely to promote private investment in the commodity value chain.
  • The private businesses may stock up the commodities in which India has only marginal surpluses, like pulses and oilseeds, by building up stock of non-perishables as they are of higher value and can be stored for a much longer period.

Way Forward

• • India has now become a surplus exporter of several agricultural products so that the amendments in the ECA 1955 helps to achieve doubling farmers’ income and ease of doing business.
  • The private investment in supply chain can be much higher than in the past.

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