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The Standing Committee on Food, Consumer Affairs and Public Distribution has asked the government to implement in “letter and spirit” the Essential Commodities (Amendment) Act, 2020, one of the three farm laws against which the farmers are protesting at the borders of Delhi for the last 114 days.
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What is the law?
The Essential Commodities (Amendment) Act, 2020 is one of the three contentious farm laws. It was enacted on September 26, 2020 by amending the Essential Commodities Act, 1955. Under the amended law, the supply of certain foodstuffs — including cereals, pulses, oilseeds, edible oils, potato — can be regulated only under extraordinary circumstances, which include an extraordinary price rise, war, famine, and natural calamity of a severe nature. In effect, the amendment takes these items out from the purview of Section 3(1), which gave powers to the central government to “control production, supply, distribution, etc., of essential commodities.”
Through the Essential Commodities Act, 2020, the government has inserted sub-section I(A) in the Section 3 of the Essential Commodities Act, 1955. The new sub-section states, “the supply of such foodstuffs, including cereals, pulses, potato, onion, edible oilseeds and oils, as the Central Government may, by notification in the Official Gazette, specify, may be regulated only under extraordinary circumstances which may include war, famine, extraordinary price rise and natural calamity of grave nature…”
The new law also specifies conditions when the stock limits can be imposed.
Why has the committee recommended the implementation of the law?
The Parliamentary Standing Committee on Food, Consumer Affairs and Public Distribution, headed by TMC member Sudip Bandyopadhyay, has recommended to the government to implement, “in letter and spirit,” the Essential Commodities (Amendment) Act, 2020. In its report on ‘Price Rise of Essential Commodities- Causes and Effects,’ the committee has given reasons for the implementation of the law. “The Committee note that although the country has become surplus in most agricultural commodities, farmers have been unable to get better prices due to lack of investment in cold storage, warehouses, processing and export as entrepreneurs stated to be get discouraged by the regulatory mechanisms in the Essential Commodities Act, 1955,” says the report of the committee.
The committee also notes that “there is a need to create an environment based on ease of doing business and for removing the fear of frequent statutory controls under the Essential Commodities Act in order to boost immediate investment in the agriculture sector, increase competition and enhance farmers’ income.”
Who all are the members of the committee?
The 30-member committee has members from both the houses and 13 parties. The names of the members are: Bhagwant Mann (AAP); Girish Bhalchandra Bapat, Gangasandra Siddappa Basavaraj, Pratima Bhoumik, Anil Firojiya, Sanganna Amarappa Karadi, Ajay (Teni) Misra, Khagen Murmu, Mitesh Rameshbhai (Bakabhai) Patel, Subrata Pathak, Himadri Singh, Satish Chandra Dubey, Roopa Ganguly and Sakaldeep Rajbhar (all BJP); Saptagiri Sankar Ulaka, Rajmohan Unnithan, Vaithilingam Ve. and Rajmani Patel (all Congress); Ganesan Selvam (DMK); Kavita Singh (JD(U)); K.G. Kenye (Naga Peoples Front); Farooq Abdullah (NC; Fauzia Tahseen Ahmed Khan (NCP); M.C. Mary Kom(Nominated); Anbumani Ramadoss (PMK); Rajendra Dhedya Gavit (Shiv Sena); Shafiqur Rahman Barq (SP) Shanta Chhetri (TMC); and Nandigam Suresh (YSRCP).
Has any of the members given dissent notes in the report?
While most of the parties, which have members on this committee, have opposed the three farm laws, none of the 30-member has given a dissent note in the report.
How is an ‘essential commodity’ defined?
There is no specific definition of essential commodities in The Essential Commodities Act, 1955. Section 2(A) states that an “essential commodity” means a commodity specified in the Schedule of the Act.
The Act gives powers to the central government to add or remove a commodity in the Schedule. The Centre, if it is satisfied that it is necessary to do so in public interest, can notify an item as essential, in consultation with state governments.
According to the Ministry of Consumer Affairs, Food and Public Distribution, which implements the Act, the Schedule at present contains seven commodities — drugs; fertilisers, whether inorganic, organic or mixed; foodstuffs including edible oils; hank yarn made wholly from cotton; petroleum and petroleum products; raw jute and jute textiles; seeds of food-crops and seeds of fruits and vegetables, seeds of cattle fodder, jute seed, cotton seed.
By declaring a commodity as essential, the government can control the production, supply, and distribution of that commodity, and impose a stock limit.
Under what circumstances can the government impose stock limits?
While the 1955 Act did not provide a clear framework to impose stock limits, the amended Act provides for a price trigger. It says that agricultural foodstuffs can only be regulated under extraordinary circumstances such as war, famine, extraordinary price rise, and natural calamity.
However, any action on imposing stock limits will be based on the price trigger.
Thus, in case of horticultural produce, a 100 per cent increase in the retail price of a commodity over the immediately preceding 12 months or over the average retail price of the last five years, whichever is lower, will be the trigger for invoking the stock limit for such commodities.
For non-perishable agricultural foodstuffs, the price trigger will be a 50% increase in the retail price of the commodity over the immediately preceding 12 months or over the average retail price of the last five years, whichever is lower.
However, exemptions from stock-holding limits will be provided to processors and value chain participants of any agricultural produce, and orders relating to the Public Distribution System.
Why was an amendment needed?
The 1955 Act was legislated at a time when the country was facing food scarcity due to persistent low levels of foodgrains production. The country was dependent on imports and assistance (such as wheat imports from the US under PL-480) to feed the population. To stop hoarding and black marketing of food, The Essential Commodities Act was enacted in 1955.
The situation has, however, changed now. A note prepared by the Ministry of Consumer Affairs, Food and Public Distribution shows that production of wheat has increased 10 times (from less than 10 million tonnes in 1955-56 to more than 100 million tonnes in 2018-19), while the production of rice has increased more than four times (from around 25 million tonnes to 110 million tonnes during the same period). The production of pulses has increased 2.5 times, from 10 million tonnes to 25 million tonnes.
India has also become an exporter of several agricultural products now.
Why is it being opposed?
The Opposition says the amendment will hurt farmers and consumers, and will only benefit hoarders. They say the price triggers envisioned in the Bill are unrealistic — so high that they will hardly ever be invoked.
