Prime Minister Narendra Modi in a meeting over the weekend with Home Minister Amit Shah, Agriculture Minister NS Tomar, and Finance Minister Nirmala Sitharaman discussed reforms required in the farm sector.

Share Market Live

NSE

The meeting agenda included - enhancing agriculture marketing, management of marketable surplus, access to institutional credit, and freeing agriculture sector of various restrictions. One of the focus areas was how to make the Essential Commodities Act compatible with present times as it will with other things, help control sudden spikes in prices.

What are Essential Commodities?

Essential commodities are those goods which are essential to maintain an acceptable standard of living. Foodgrains, fertilizers, edible oil, drugs, fuels, and petroleum. Recently masks and hand sanitizers have been added to the list.

What is the Essential Commodities Act?

The Essential Commodities Act, 1955 is an Act in India enacted to provide for the control of the production, supply and distribution of, and trade and commerce, in certain commodities to facilitate the interest of the general public.

Why Essential Commodities Act?

To control hoarding, black marketing and to control any big rise in prices. Face masks were added in the list after the government observed that they were being sold at exorbitant rates.

COVID-19 and Essential Commodities Act

The Ministry of Home Affairs on April 07, 2020, issued an advisory to state governments to invoke the Essential Commodities Act for ensuring the availability of Essential Goods. The states were told to tackle the possibility of inventory building, black marketing, and profiteering, speculative trading amid lockdown. The states are looking into price capping, enhancing production, an inspection of dealer accounts, etc.

Penalty for contravention of the Act

If a person is found to contravene with the provisions of the Act, it can be classified as a criminal offense punishable with imprisonment up to 7 years or with the imposition of fine or both. State/Union Territory governments may also consider detention of offenders under the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980.

Need for Making the ECA compatible?

Restrictions under the ECA are seen as draconian and unpredictable. The Govt holds powers and control on price &volume. Without notice, the government can change the quantity of food that a trader can store or can cap the price or the movement of goods. There have been instances of such orders made overnight, making existing or forward contracts void.

What is the way forward?

Even as the Govt has been giving numerous incentives to the Agriculture and farmers, the sector has seen lack of private investment and lack of big private players taking part due to lack of incentive, profitability, and control from the government.

The ask has been that the Commodities act needs to be compatible with present times so that large scale private investment in post-harvest Agriculture, infrastructure, technology can be invited and encouraged.

First Published:May 3, 2020 7:46 PM IST