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Essential Commodities (Amendment) Bill, 2020

Sat 26 Sep, 2020

Why in News ?

Rajya Sabhahas has recently passed the Essential Commodities (Amendment) Bill, 2020 which is aimed at deregulating commodities such as cereals, pulses, oilseeds, edible oils, onion and potatoes. It replaces an ordinance that the government had promulgated on June 5, along with two other ordinances on the farm sector.

What is Essential Commodities Act,1955

  • The Essential Commodities Act,1955 is a law that prohibits hoarding and black marketing of essential commodities. It is applicable throughout the country including Jammu and Kashmir. The list of the essential item under the Act include; pulses and edible oils, drugs, fertilisers, and petroleum and petroleum products etc. If the Central government finds that the price of a certain commodity is shooting up due to short supply, it orders the State Governments and Union Territories to fix the stock- holding limit of that commodity for a fixed period..

Why is it important?

  • The ECA 1955, gives consumers protection against irrational spikes in 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.
  • But there is another side to the story. Given that almost all crops are seasonal, ensuring round-the-clock supply requires adequate build-up of stocks during the season. So, it may not always be possible to differentiate between genuine stock build-up and speculative hoarding.

What are the new changes in Amendment Bill ?

  • The new Bill amends the Essential Commodities Act, 1955, by introducing a new Subsection (1A) in Section 3. After the amendment, the supply of certain foodstuffs — including cereals, pulses, oilseeds, edible oils, potato — can be regulated only under extraordinary circumstances, which include an extraordinary price rise, war, famine, and natural calamity of a severe nature. In effect, the amendment takes these items out from the purview of Section 3(1), which gives powers to central government to “control production, supply, distribution, etc, of essential commodities”.

How is an ‘essential commodity’ defined?

  • There is no specific definition of essential commodities in the Essential Commodities Act, 1955. Section 2(A) states that an “essential commodity” means a commodity specified in the Schedule of the Act. Recently, the Central Government has notified order under the Essential Commodities Act to declare masks and hand sanitizers as Essential Commodities up to 30th June 2020.

What will be the impact of the amendments?

  • While the purpose of the Act was originally to protect the interests of consumers by checking illegal trade practices such as hoarding, it has now become a hurdle for investment in the agriculture sector in general, and in post-harvesting activities in particular. The private sector had so far hesitated about investing in cold chains and storage facilities for perishable items as most of these commodities were under the ambit of the EC Act, and could attract sudden stock limits. The amendment seeks to addresssuch concerns.