While India has become surplus in most Agri-commodities, farmers have been unable to get better prices due to lack of investment in cold storage, warehouses, processing and export as the entrepreneurial spirit gets dampened due to Essential Commodities Act. Farmers suffer huge losses when there are bumper harvests, especially of perishable commodities. The legislation will help drive up investment in cold storages and modernization of food supply chain. It will help both farmers and consumers while bringing in price stability. It will create competitive market environment and also prevent wastage of agri-produce that happens due to lack of storage facilities.
The Essential Commodities Act, 1955 was enacted to ensure the easy availability of ‘essential commodities’ to consumers and to protect them from exploitation by unprincipled traders. At a time, when this law was initially brought, India was not self-sufficient in food grains production. But now the situation has changed, therefore, this amendment was necessitated as a part of the process of globalisation. And, also the Government is steadily and securely following the policy of eliminating all unnecessary restrictions on the movement of goods, coupled with the trimming of ‘essential commodities’ list so as to promote free trade besides safeguarding the consumers interest in general and the farmers interest in particular.
The excessive regulatory regime proved detrimental for the growth of agriculture sector. The amended law provides that the Union Government can regulate the supply of certain foodstuffs including cereals, pulses, potato, onions, edible oilseeds, and oils, only under extraordinary circumstances which include war, famine, extraordinary price rise and natural calamity of grave nature. The main object is to ensure ‘equitable distribution’ of foodstuffs and their ‘availability at fair prices’ in exceptional situations as against ‘regular-routine regulation regime’.
The law now states that any action on imposition of stock limit on agricultural produce must be based on price rise. A stock limit may be imposed only if there is 100% increase in retail price of horticultural produce or 50% increase in the retail price of non-perishable agricultural food items.
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