Historic amendment to the Essential Commodities Act

The Union Cabinet approved an amendment to the ‘Essential Commodities Act of 1955’ to “deregulate” agricultural commodities like cereals, pulses, oilseeds, onions and potatoes besides promulgating an ordinance to allow farmers to engage with processors, aggregators, large retailers, exporters.

• The Essential Commodities Act 1955 aims to provide, in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce in, certain commodities.
• According to the Act, if the central government is of opinion that it is necessary for maintaining or increasing supplies of any essential commodity, securing their equitable distribution and availability at fair prices or securing any essential commodity for the defense of India, it may provide for regulating or prohibiting the production, supply and distribution and trade and commerce therein.

Highlights

• The 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 include extraordinary price rise, war, famine, and natural calamity of a severe nature.

What is essential commodity?

• There is no specific definition of essential commodities in The EC Act. Section 2(A) of the act states that an “essential commodity” means a commodity specified in the “Schedule” of this Act.
• The Act gives powers to the central government to add or remove a commodity in the “Schedule.”
• The Centre, if it is satisfied that it is necessary to do so in public interest, can notify an item as essential, in consultation with state governments
  • At present, the “Schedule” contains 9 commodities — drugs; fertilisers, whether inorganic, organic or mixed; foodstuffs, including edible oils; hank yarn made wholly from cotton; petroleum and petroleum products; raw jute and jute textiles; seeds of food-crops and seeds of fruits and vegetables, seeds of cattle fodder, jute seed, cotton seed; face masks; and hand sanitisers.
• The latest items added to this schedule are face masks and hand sanitisers, which were declared essential commodities with effect from March 13, 2020 in the wake of Covid-19

What was the need of such amendment?

• The Essential Commodities Act was originally enacted to stop the hoarding and black marketing of foodstuffs.
• The EC Act was legislated at a time when the country was facing scarcity of foodstuffs due to persistent abysmal levels of foodgrain production.
• The country was dependent on imports and assistance (such as wheat import form US under PL-480) to feed the population.
• But now the situation has changed.
  • production of wheat has increased by 10 times (from less than 10 million tonnes in 1955-56 to more than 100 million tonnes in 2018-19)
  • during the same period, the production of rice has increased more than four times from around 25 million tonnes to 110 million tonnes.
  • production of pulses has increased by 2.5 times, from 10 million tonnes to 25 million tonnes.
• In fact, India has now become an exporter of several agricultural products. With these developments, the EC Act has become anachronistic.