Essential Commodities Act

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Essential Commodities (Amendment) Act, 1955
Parliament of India
Long title
  • An Act to provide, in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce in, certain commodities.
CitationAct No. 10 of 1955
Territorial extent
Republic of India
Enacted byParliament of India
Enacted1955
Amended by
Essential Commodities (Amendment) Act, 2020[1]
Status: In force

The Essential Commodities Act (ECA) is an

2020 Indian farm reforms
.

The ECA was enacted in 1955 and has since been used by the Government to regulate the production, supply, and distribution of a whole host of commodities that is declared ‘essential’ to make them available to consumers at fair prices. Additionally, the government can also fix the

minimum support price
(MSP) of any packaged product that it declares an “essential commodity”.

The list of items under the Act includes drugs, fertilizers, pulses, and edible oils, as well as petroleum and petroleum products. The centre can include new commodities as and when the need arises, and take them off the list once the situation improves.

Usage

If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period. The States act on this notification to specify limits and take steps to ensure that these are adhered to. Anybody trading or dealing in the commodity, be it wholesalers, retailers, or even importers are prevented from stockpiling it beyond a certain quantity.

A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity. This improves supplies and brings down prices. As not all shopkeepers and traders comply, State agencies conduct raids to get everyone to toe the line and the errant are punished. The excess stocks are auctioned or sold through fair price shops.

Background

The ECA was enacted in 1955 and has since been used by the Government to regulate the production, supply, and distribution of a whole host of commodities that it declares ‘essential’ to make them available to consumers at fair prices.

On 14 March 2020, the

Union Government brought masks and hand-sanitizers under the act to make sure that these products—key for preventing the spread of COVID-19—are available to people at the right price and in the right quality during the COVID-19 pandemic in India.[4]
As of 1 July 2020, however, the Government has removed masks and hand-sanitizers from its Essential Commodity List.

Amendments

Essential Commodities (Amendment) Act 2020

In May 2020, Finance Minister Nirmala Sitharaman suggested that the Act will be amended and stock limit will be imposed only under exceptional circumstances such as famine or other calamities. There will be no stock limit for processors and supply chain owners based on their capacity and for exporters based on the export demand.[5][6] It would also end some punitive measures. It will also deregulate agricultural produce such as pulses, onion, potato and cereals, edible oils, and oilseeds, to realize better prices for farmers.[6]

The Essential Commodities (Amendment) Ordinance was promulgated on 5 June 2020.[7] The Lok Sabha passed the ordinance to amend Essential Commodities Act on 15 September 2020, and Rajya Sabha passed it on 22 September 2020.[8] On 27 September 2020, the bill became an act after receiving approval from President Ram Nath Kovind.The Act has been already gazetted .[9]

The ordinance amends the Essential Commodities Act to allow the Government of India to delist certain commodities as essential, allowing the government to regulate their supply and prices only in cases of war, famine, extraordinary price rises, or natural calamities. The commodities that have been deregulated are food items, including cereals, pulses, potatoes, onion, edible oilseeds, and oils.[10] These can only be regulated in the extraordinary circumstances previously mentioned, by imposing limits on the number of stocks of such items that can be held by persons. The Ordinance states that government regulation of stocks will be based on rising prices, and can only be imposed if there is a 100% increase in retail price (in the case of horticultural produce) and a 50% increase in retail price (in the case of non-perishable agricultural food items). These restrictions will not apply to stocks of food held for public distribution in India.[11]

In 2021, the Parliamentary Committee on Food, Consumer Affairs and Public Distribution had submitted a report to the Union Government recommending implementation of the Essential Commodities Act, 2020. The Essential Commodities Act, 2020 was one among the three controversial 2020 Indian agriculture acts that led to the year long 2020–2021 Indian farmers' protest. Bhagwant Mann publicly released his statement that was made during the Committee meeting on 5 June 2020. In his statement, Mann had raised concerns that these farm laws would increase hoarding. Removal of onions and tomato from the list of Essential Commodities, would lead to price rise due to illegal stockpiling to increase the price and then selling at higher prices. This will create hardships for the poor. He also raised the issue of hoarding of potatoes.[12]

Farm unions began the 2020–2021 Indian farmers' protest against three farm acts that were passed by the Parliament of India in September 2020. The acts, often called the Farm Bills,[13] have been described as "anti-farmer laws" by many farmer unions,[14][15] and politicians from the opposition who say it would leave farmers at the "mercy of corporates".[16][17]

By mid December, the Supreme Court of India had received a batch of petitions asking for the removal of blockades created by the protesters around Delhi.[18] The Supreme Court of India stayed the implementation of the farm laws in January 2021. Farmer leaders welcomed the stay order, which remains in effect.[19][20] A Supreme Court appointed committee submitted its confidential report before the court.[21]

Six state governments (Kerala, Punjab, Chhattisgarh, Rajasthan, Delhi and West Bengal) passed resolutions against the farms acts,[22] and three states (Punjab, Chhattisgarh and Rajasthan) have tabled counter legislation in their respective state assemblies.[23] None of the counter legislation passed the respective state governors.[24][25][26]

On 19 November 2021, the union government decided to repeal the bills,

MS Swaminathan–headed National Commission on Farmers reports.[29]

References

  1. ^ "Bills List | Ministry OF Parliamentary Affairs, Government of India".
  2. ^ "Ministry of Consumer Affairs of the Government of India. Official Website. Annual Report 2005 - 2006, Chapter IV, 'Essential Commodities Act 1955'". Archived from the original on 5 November 2011. Retrieved 9 May 2012.
  3. ^ "ECA, 1955". Archived from the original on 25 September 2012. Retrieved 10 October 2013.
  4. ^ "Masks, sanitizers put under Essential Commodities Act". @businessline. Retrieved 25 March 2020.
  5. ^ NEWS, OMMCOM (15 May 2020). "Centre To Amend Essential Commodities Act; Deregulate Pulses, Onion". ommcomnews.com. Retrieved 19 May 2020.
  6. ^ a b "Explained | Amendments to Essential Commodities Act". Moneycontrol. Retrieved 19 May 2020.
  7. ^ Ministry of Law and Justice (Legislative Department), Government of India (5 June 2020). "Essential Commodities (Amendment) Ordinance" (PDF). E-Gazette of India. Retrieved 30 July 2020.
  8. ^ "Lok Sabha clears bill to amend Essential Commodities Act". The Economic Times.
  9. ^ Parliament, Indian. "Essential Commodities (Amendment) Act 2020" (PDF). egazette.nic.in. Retrieved 26 December 2020.
  10. ^ "Cabinet amends Essential Commodities Act, approves ordinance to ease barrier-free trade". The Indian Express. 3 June 2020. Retrieved 30 July 2020.
  11. ^ "The Essential Commodities (Amendment) Bill, 2020". PRSIndia. 6 June 2020. Retrieved 30 July 2020.
  12. ^ "Bhagwant Mann releases statement before House panel, dares Harsimrat to come clean". The Indian Express. 24 March 2021. Retrieved 10 February 2022.
  13. ISSN 0971-751X
    . Retrieved 27 January 2021.
  14. ^ Palnitkar, Vaibhav (21 September 2020). "Here's Why Farmers Are Protesting the 3 New Agriculture Ordinances". The Quint. Archived from the original on 31 October 2020. Retrieved 28 October 2020.
  15. ISSN 0362-4331. Archived
    from the original on 1 December 2020. Retrieved 1 December 2020.
  16. The Tribune (Chandigarh). 15 June 2020. Archived
    from the original on 11 December 2020. Retrieved 2 December 2020.
  17. ^ Kulkarni, Sagar (22 September 2020). "Now, farmers will be back to serfdom, at the mercy of big corporates: Manish Tewari". Deccan Herald. Archived from the original on 6 October 2020. Retrieved 2 December 2020.
  18. ^ Vaidyanathan, A (16 December 2020). Sanyal, Anindita (ed.). "Centre-Farmers' Committee, Suggests Supreme Court, Or "Talks Will Fail"". NDTV. Archived from the original on 17 December 2020. Retrieved 17 December 2020.
  19. ^ Iftikhar, Fareeha (12 January 2021). "Farmers reject SC committee, demand repeal of farm laws". Hindustan Times. Archived from the original on 19 January 2021. Retrieved 15 January 2021.
  20. ISSN 0971-751X
    . Retrieved 9 February 2021.
  21. ^ "Supreme Court-appointed farm laws committee invites views, suggestions before February 20". India Legal. 28 January 2021. Retrieved 9 February 2021.
  22. ^ Rai, Arpan, ed. (28 January 2021). "West Bengal passes resolution against three farm laws, sixth state to do so". Hindustan Times. Retrieved 26 March 2021.
  23. ^ "Toeing Punjab and Chhattisgarh, Rajasthan introduces three bills to counter Centre's farm laws". The Indian Express. 31 October 2020. Retrieved 26 March 2021.
  24. ^ "Will move SC if President doesn't give assent to Punjab amendments: CM". Hindustan Times. 18 March 2021. Retrieved 26 March 2021.
  25. ^ Bhandari, Prakash (26 December 2020). "Congress government in Rajasthan upset with Governor for withholding farm Bills passed by Vidhan Sabha". National Herald. Retrieved 26 March 2021.
  26. ^ "Chhattisgarh governor returns government's proposal to hold Assembly session to negate farm laws". Scroll.in. 20 October 2020. Retrieved 26 March 2021.
  27. ^ Saaliq, Sheikh (19 November 2021). "India to repeal controversial farm laws that led to protests". AP NEWS. Retrieved 19 November 2021.
  28. ^ "Parliament clears Farm Laws Repeal Bill without a debate". The Hindu. 30 November 2021. Retrieved 30 November 2021.
  29. ^ Mishra, Dheeraj (27 December 2020). "Reality Belies Modi Govt Claims of Implementing Swaminathan Commission's Report". The Wire. Retrieved 26 November 2021.

See also

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