Essential Commodities Act deregulated

What is the Essential Commodities Act?

It’s a law that gives the Centre and state governments the power to regulate the production, supply , distribution and prices of commodities. The act came into being in 1955 when the economy was dealing with food shortage and famine. However, the act does not serve any purpose in the current situation.

Essential Commodity Act – A Hurdle !

The act has been considered a major impediment in the growth of agriculture sector as traders are scared to buy more on the fear of imposition of stock holding limits at any time. Investment in warehouses infrastructure has been slow and low as they could be raided by authorities for holding excess stock. Agri commodity market participants have been vocal about the harassment by authorities under the act.

The NITI Aayog has in past called the Essential Commodity Act as a hindrance to farm exports. The Economic Survey 2019-20 called Essential Commodity Act as one of the anachronistic legislations

Various governments in India have tried to help farmers though subsidy programs, loan waivers, direct benefits transfers, and then an act like Essential Commodity Act disincentives investment in warehouses and storage.

The Road Ahead

While the fine print is still awaited on the form and time line of the amendment, there will now be no limit on the quantity that traders can buy and hold as stock. Earlier, the traders would not buy surplus and that was identified as one of the reasons that the farm incomes have taken a hit.

With the deregulation of many commodities under the Essential Commodity Act, the expectations are :

Private investment in warehouses , agri infrastructure.
Increase in purchase from processors and mills.
Food and food processing companies can increase stocks.
Farmer can sell at competitive prices.
Increase in farm exports.
No barriers on interstate trade of farm products.
Legal framework to allow farmers to fix their own fair price.
Standard mechanism that can be enforced to get a predictable price.
Interestingly, the removal of onion from the Essential Commodity Act is being seen as a bold move since there is a long history of government intervention whenever onion prices surge. more  

View all 12 comments Below 12 comments
Essential Commodities Act is necessary in our country being our people in trading prone to taking undue advantage of any adverse situation, hoarding the essential commodities to create artificial shortage and increase prices several times of their actual prices. However, a suitable system should be evolved for its review at regular intervals to modify as per the demand of the prevailing situation.
I don't think the Act is a hurdle for the farmers in getting reasonable prices of their products. As all are aware that the minimum support prices for the essential agricultural commodities are reviewed by the governments (central & state) every year and fixed upwards taking all incidental charges and margins into account. Are you aware of the fate of the products in excess of government purchase? The farmers are forced to sale their excess crops in markets at much cheaper than the government fixed minimum prices! The act is not applicable to vegitable, fruits and other perishable produces and what happens to the farmer producers? When we pay Rs 20 or 30 for a KG of tomato, can we imagine the actual share of the farmer growers in this money. It is not more than Rs 5 to 7. Similar is the case in respect of other crops outside the purview of the Act. Should we still seek deregulation of the Act? more  
Well we have to wait for the fine print as there can always be a gap between intent and action. There is a great need to move away from all legislation that stand as barriers in reforming the agricultural produce marketing. Farmers need freedom to sell their produce anywhere and any time. Why should agricultural produce be subjected to marketing restrictions while all luxury products can be sold in any manner. The Essential Commodities Act or APMC Act have to be scrapped/repealed! If the Government wants to regulate marketeers, it may do so. more  
I will just like to say that let there be a free market so that the agricultural production gets stabilised, the farmers gets remunerative prices and the consumer gets the produce at reasonable prices and middle man who are striving at the cost of both but should get decent margins not exorbitant profits more  
Essential Commodities Act might be deregulated, but review and revision is necessary at regular interval. more  
Now private hoarding will be allowed for ecommerce?

From: "Sarika Bansal"
Sent:Sat, 16 May 2020 18:53:51 +0530
Subject: "Essential Commodities Act..." more  
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