Lok Sabha Passes Essential Commodities (Amendment) Bill, 2020 To Remove Stock Limit On Agricultural Produce

The Bill seeks to amend the Essential Commodities Act, 1955. When read with Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, 2020 and the Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, 2020 (both of which have been introduced in the lower house), the Bill aims to increase the availability of buyers for farmers' produce, by allowing them to trade freely without any license or stock limit.

Key Features

Regulation of food items

The Essential Commodities Act, 1955 empowers the central government to designate certain commodities such as food items, fertilizers, etc. as essential commodities and regulate its production, supply, distribution, trade, and commerce, for securing their 'equitable distribution' and 'availability at fair prices'.

The Bill provides that the Central Government may regulate the supply of certain food items including cereals, pulses, potatoes, onions, edible oilseeds, and oils. This power can be exercised only under "extraordinary circumstances" like (i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature.

Stock limit

The Bill requires that imposition of any 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;
• 50% increase in the retail price of non-perishable agricultural food items.

The increase will be calculated over the price prevailing immediately preceding twelve months, or the average retail price of the last five years, whichever is lower.

Parliamentary Debate

Congress MP Dr. Amar Singh opposed the Bill and said that it completely departs from the original intention of the principal Act. He highlighted that whereas the mother Act empowers Govt to issue directions to ensure 'equitable distribution' & 'maintenance fair prices', the Bill restricts power to 'extraordinary circumstances' alone.

He also pointed out that the provision for imposition of stock limit only when prices of certain commodities increase by a hundred per cent is highly unreasonable. He illustrated, if price of a cereal is Rs.100, the Government would not act even if its prices rises to Rs. 199. In such circumstances, he said, the farmers will suffer indiscriminately.

Other Members widely opposed delimitation of stock, emphasizing that it will only benefit private investors at the cost of poor farmers. "Since stock limits are being removed, a large number of corporate investors will hoard stock when prices are low," a member said.

Minister of State for Consumer Affairs defended the Bill and claimed that it is necessary to control price volatility, partly induced by the pandemic. He further assured that the farmers will benefit from this legislation as it will attract investment in cold storage and save crop produce.

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