Context: The Lok Sabha passed the Essential Commodities Amendment Bill by a voice vote.
What is ‘essential commodity’?
- There is no specific definition of essential commodities in The Essential Commodities Act.
- To stop the hoarding and black marketing of foodstuffs, The Essential Commodities Act was enacted in 1955.
- 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.” 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 outbreak.
- By declaring a commodity as essential, the government can control the production, supply, and distribution of that commodity, and impose a stock limit.
Essential Commodities Amendment Bill: salient features
- The Bill is meant to replace an ordinance promulgated in June, in the wake of the COVID-19 lockdown.
- The Bill seeks to amend the Essential Commodities Act, 1955
- The Bill provides a mechanism for the “regulation” of agricultural foodstuffs, namely cereals, pulses, oilseeds, edible oils, potato, and supplies which can only be regulated under extraordinary circumstances such as war, famine, extraordinary price rise, and natural calamity.
- It also seeks to increase competition in the agriculture sector and enhance farmers’ income.
- The bill aims to liberalise the regulatory system while protecting the interests of consumers.
- The bill empowers the central government to designate certain commodities including food items, fertilizers, and petroleum products as essential commodities.
- Regulating stock limits: It says stock limits can only be imposed if retail prices surge 50?ove the average in the case of non-perishables and 100% in the case of perishables.
- In case of horticultural produce, a 100 per cent increase in the retail price of the commodity over the immediately preceding 12 months or the average retail price of the last five years, whichever is lower, will be the trigger for invoking the stock limit for such commodities.
- Exemptions from stock-holding limits will be provided to processors and value chain participants of any agricultural produce, and orders relating to the Public Distribution System.
Need for an amendment to the EC Act:
- The EC Act was legislated at a time when 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);
- The production of rice has increased more than four times from around 25 million tonnes to 110 million tonnes in (2019-19)
- The 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.
Source: The Hindu & Indian Express