The Essential Commodities Act got amended by the Government of India in September 2020. The amendment in question took down the Essential Commodities Ordinance, 2020 (EC Ordinance) enacted in June 2020. The EC ordinance was initiated for the purpose of effecting certain changes in the Essential Commodities Act, 1955. The amendment pertaining to September 2020 has done away with the EC ordinance brought out in June. This write up strives to highlight crucial attributes regarding this amendment.
What is the meaning of Essential Commodities?
According to the dictionary, an essential commodity happens to be a need that is vital for any kind of a living being. This would be normal food grains and other kinds of supplements which can be an essential aspect of the lives of individuals.
As per the Essential Commodities Act, 1955, a clear definition for Essential Commodity is missing. But, Section 2(A) of the Act explains essential commodities as “a kind of item included under the list of the Schedule which is mentioned under the Act”. This is merely a usual meaning of essential commodity.
Also, the government wields the authority to enhance or reduce the list of essential commodities under this Act.
Items in the list of essential commodities
Any kind of medical equipment or drugs.
Food items for day to day intake like any kind of edible oil.
Fertilizers (both liquid and solid) – These could be organic or inorganic.
Cotton Yarn or any other hank yarn.
Petroleum-Based Products.
Textiles such as Raw Jute and Other Products.
Cattle Food.
Seeds of Fruits, Vegetables and other forms of edible plants.
Face Masks.
Hand- Sanitizers.
The afore-mentioned list contains several forms of essential commodities. Face Masks and Sanitizers also got added in the list from 13 March 2020, due to the surge of Coronavirus across the country. In the above list, the government has got the right to control and regulate the supply of all the items. Control implies that the government can also add or exclude any items in the list of EC.
The bill repealed by the Amendment?
Big modifications were made in the September amendment in the EC bill pertaining to the essential commodities act. It took down the Essential Commodities Ordinance 2020 brought on in June. Diverse views are circulating regarding the changes effected by the amendment.
Features of the Amendment to the Bill
The present amendment transformed the function of the Essential Communities Act 1955. This has a wholesome backing as it benefits farmer’s right to livelihood. This apart, farmers can also sell directly to private companies.
The government reserves the right to cap stock holding on essential commodities. The stock-Holding limit pertains to the extent of control the government has over the commodities. According to the amendment, stock holding ceiling on essential commodities is possible only during extreme circumstances. These circumstances are the Act of God, natural calamities, war, external aggression, famine, and other circumstances.
The government has the right to regulate commodities such as pulses, cereals, potatoes, and onion and edible items during the above-mentioned circumstances. This amendment exists under section 1A of the amendment bill.
The government has the right to implement any kind of ceiling only if the following obligations are met:
In case of a 100% price surge in agricultural or horticulture produce. This price rise has to be in the retail price of the agricultural or horticulture produce.
In case of a 50% spike in the retail rate of non-perishable agricultural produces.
This kind of imposition will be arrived at on the basis of the price of the agriculture or horticulture produces in the existing 12 months or the average retail price being charged. The lower of the above value will be considered.
The ordinance is not valid for any processor, or any kind of value chain participant of the agriculture or horticulture produce. For this, the stock held by a person or a company should not be over:
The entire processing ability of the installed system; or
Demand for the exporter in the event of any kind of exports.
Value chain participant happens to be any kind of individual or entity involved in enhancing value to the agricultural production chain. This participant could be in any level of the process, including storage, production, packaging, transport, and distribution to the agricultural produce.
The features of this ordinance are not applicable to any kind of government order pertaining to the public distribution system or any form of the target public distribution systems. Under these systems, the government disburses pulses and food grains at subsidized rates to certain people.
Does this amendment hold any merits?
- Several experts have clarified that his amendment can be good going forward.
- Farmers can deal with companies and other private organizations devoid of any intermediaries for the purpose of selling agricultural produce.
- The livelihood of farmers would go up in the future.
- Farmers do not require any middlemen for using this system.
- Overall farmer’s income will intensify as the products created by farmers can be sold anywhere. This will not just be applicable in any local mandi or Kirana stores.
- Large organizations would put in money in villages by dealing with farmers directly, thus augmenting their revenue.
Demerits pertaining to the Amendment
Many have hailed the amendment, but there have been many criticisms as well.
With private organizations dealing with produce, hoarding will intensify. Prior to the amendment, hoarding wasn’t permitted. But, this amendment can result in indirect hoarding also. These amendments take away the states’ rights to create rules on Essential Commodities, because this amendment was enacted across the nation.
Goods’ prices under the Essential Commodities act may go up if large procurement orders are performed by various organizations. This will permit the government to control the products under the amendment via the ‘exceptional circumstances’ clause in the bill.
Hoarding can also hike the rates of essential commodities such as onion and potato, which is quite common in the kitchens of Indian households.
Conclusion
The government effected a change in the essential commodities act, 1955. The amendment regarding the bill abandoned the EC (Ordinance), 2020 brought out by the government to control commodities. Having said that, the amendment permitted the government only to regulate the stock holding limit regarding essential commodities under extreme circumstances. Yet, this amendment can benefit the farmers. Farmers would be able to transact with organisations directly. This can boost their revenues from agricultural produce. But, the amendment could increase the prospect of hoarding. So, it can be safely surmised that the amendment has both positive and negative aspects.