Government Approves Amendment of Essential Commodity Act

The Union Cabinet approved the amendments to the six-decade-old Essential Commodities Act. The move will deregulate the production, purchase, and sales of cereals, edible oils, oilseeds, pulses, onions, and potato.

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.

  • The key changes seek to free agricultural markets from the limitations imposed by permits and mandis that were originally designed for an era of scarcity. The move provides more choices for farmers to trade their produce,
  • Farmers will be  freed from constraints of the Agriculture Produce Marketing Committee (APMC). The move is expected to attract private investment in the value chain of these commodities.
  • The freedom to sell will help farmers to harness economies of scale and will attract private and foreign direct investments.
  • The private sector has so far hesitated investing in cold chains and storage facilities for perishable items as most of these commodities are under the ambit of the EC Act, and can attract sudden stock limits. But now the situation can change.
  • Further, it will help boost investment in cold storages and modernization of the food supply chain. Also, this will free farmers from selling their produce to their filed level APMC mandis. The act will allay the fears of private investors over excessive regulatory interferences.                                       LEARNING WITH TIMES/AT HOME : BASICS 

The ECA was introduced at a time when India was beset by massive food shortages owing to famines or wars. It was a law to prevent hoarding and blackmarketing of essential commodities like food grains and ensure food security. 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. For example  face masks; and hand sanitisers were declared essential items 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.














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