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Cabinet amends Essential Commodities Act, approves ordinance to ease barrier-free trade

"The Cabinet, chaired by PM Narendra Modi, approved historic amendment to Essential Commodities Act.The regulatory environment has been liberalised for farmers through this," Union Minister Prakash Javadekar said at the media briefing.

By: Express Web Desk | New Delhi |
Updated: June 3, 2020 7:29:51 pm
Prime Minister Narendra Modi at a Union Cabinet meeting in New Delhi on Wednesday

The Union Cabinet on Wednesday approved an amendment to the Essential Commodities Act of 1955 to “deregulate” agricultural commodities like cereals, pulses, oilseeds, onions and potatoes besides promulgating an ordinance to allow farmers to engage with processors, aggregators, large retailers, exporters.

Addressing a media briefing, Agriculture Minister Narendra Singh Tomar said the Cabinet had approved “The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020” to ensure barrier free trade in agriculture produce. It will not bind farmers to sell their crop only to licensed traders in the APMC (Agricultural Produce Market Committee) mandis of their respective talukas or districts.

Besides, the “Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020” will empower farmers for engaging with processors, aggregators, large retailers, exporters on a level playing field without any fear of exploitation.

“This will go a long way in helping India’s farmers while also transforming the agriculture sector. The proposed amendment to the Essential Commodities Act will allay fears of private investors of excessive regulatory interference,” he said.

The amendment to the EC Act will allow clamping of stock limits on agricultural commodities only under “very exceptional circumstances” like natural calamities and famines. Besides enabling better price realisation for the country’s farmers, the amendment ensures no such stock limit shall apply to processors or value chain participant, subject to their installed capacity or to any exporter subject to the export demand.

“The amendment to the Essential Commodities Act will allay fears of private investors of excessive regulatory interference. This is a historic-step in unlocking the vastly regulated agricultural markets in the country,” Tomar said.

An announcement in this regard was made by Finance Minister Nirmala Sitharaman on May 15 when she unveiled the third tranche of measures to cushion the impact of the lockdown on the economy under the Aatmanirbhar package.

On May 17, the Ministry of Consumer Affairs, Food and Public Distribution had circulated a draft of the ordinance to amend the EC Act. The ECA draws from the days of the Bengal famine and the Defence of India Rules of 1943. Describing the EC Act as “anachronistic”, the Economic Survey 2019-20, too, recommended the “jettisoning” of this law.

Prime Minister Narendra Modi said the decisions would have a very positive impact on rural India, especially industrious farmers. “Long-pending agrarian reforms will enable the transformation of the sector,” PM Modi tweeted.

Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020 would pave the way for the creation of “One India, One Agriculture Market”, he noted. “There are provisions which increase usage of technology and enable effective dispute resolution mechanisms,” Modi said.

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