The Essential Commodities Act was brought in 1955 to stop the foodstuffs
hoarding and black marketing, at a time when there is low production of food
crops and the nation was suffering from hunger and scarcity.
At that time the point came when we had to rely on imports and assistance
especially from the countries like the U.S.A., therefore this act became the
need of an hour to stop the hoarding of essential products such as oil-cakes,
onion, rice, etc. to fulfill the demand of the citizens.
The term Essential Commodity is defined under Section 2(A) of the Essential
Commodities Act, 1955, which means a commodity mentioned or specified in the
schedule. Therefore, such 7 commodities are specified in this schedule which are
Drugs, Fertilizers, Foodstuffs, including edible oils, Hank yarn, Petroleum and
its products, Jute, and Seed of fruits, vegetables, cattle fodder, and jute.
Powers to Central Government
This act gives the power to the center to add or to remove the goods they want
according to the demand and supply in the market. They can control the demand,
supply, production, distribution, and as well as stock limit of the commodity
There are two primary aims of this Act:
What is the amendment?
- To keep up or increase the supply of these fundamental commodities, and
- To secure impartial dispersion and accessibility of these essential
Under Section 3 of the Essential commodities act, 1955 the subsection (1 a) was
introduced. In this subsection, certain foodstuffs such as onions, cereals,
pulses, potato, oils, and edible oil seeds are removed from the list and now
these items are not counted in the essential commodity list. The regulation of
these foodstuffs can take place but only in extraordinary circumstances. These
extraordinary circumstances are war, famine, natural calamity, and extraordinary
price rise. Prior, these commodities were not mentioned under Section 3, and
reasons for conjuring the section were not specified. Amendment moreover,
exempts, certain food (processors, value chain participants) & exporters subject
to the constrained ceiling.
Circumstances for imposing a stock limit
In the act of 1955, the clear framework to impose the stock limit is nowhere
mentioned. The amendment came with the clauses for stock limiting where the
circumstances are mentioned for the government to impose a stock limit. These
circumstances are war, famine, natural calamity, and rise in extraordinary price
which is termed as price trigger in the clause.
The stock limit imposition portrayed with the charge notices that the stock
constrain should be forced on the crops as it were in cases of cost rise up to
100% on agricultural products and 50 % increment within the retail cost of
non-perishable agricultural food products, where the increment will be
calculated based on the cost patterns winning over the going before 12 months or
the normal retail cost of the last 5 years.
Need of a change
The act was legalized at a time in 1955 when the country was suffering from
scarcity. But now the situation has changed due to explosive growth in the
export of agricultural products.
The amendment leads to free the agricultural market from the limitations imposed
by the Agricultural Produce Market Committee (APMC) which will further lead to
the freedom to produce, hold, move, distribute and supply. Therefore,
strengthening the economics of scale will attract private investments into the
The stock limit relaxations under the ECA may lead to black marketing and
hoarding which will only benefit hoarders but not the farmers and consumers.
It is also said that the price triggers envisioned in the bill are unrealistic
which may lead rise in inflation and the monopoly of some individuals over the
price of certain goods.
According to the Economic Survey, 2020, India now no longer faces food shortage
issues. Also, the food grain production has expanded since the 1950s and India
is presently an exporter, thereby giving the act anachronistically.
What is disregarded, in any case, is the population of India increased to 1.3
billion in 2020 from 360 million in 1951. The responsibility of ensuring food
security to the masses cannot be shunned as there are more mouths to
nourish. Sights of migrants scraping for pieces of nourishment during the
COVID-19 crisis continue to haunt.
The overview said 76,000 raids were conducted in 2019 beneath the Essential
Commodities Act to prevent violation of stock limits. Also, we cannot ignore the
pulses scam where the prices are manipulated in 2015. Income tax department
investigation found that several huge MNCs played a major role in seeking prices
of pulses. spiking prices of pulses. Thus, the policies must ensure sustainable
farm growth taking into consideration factors like farmers' interests, climate
change, consumer capacity, and landholdings.
According to my opinion, India needs Agricultural reforms as some statistics
said that roughly 60 percent of the Indian population works within the industry,
contributing around 18 percent to India's GDP. This share diminishes steadily
with each year, with advancement in other regions of the country's economy.
Therefore, we need to boost our agricultural sector by working on loopholes so
that farmers may attain the full benefit of this act.
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