Parliament Passes Essential Commodities (Amendment) Bill 2020

The Parliament on Tuesday passed the Essential Commodities (Amendment) Bill 2020 which proposes to remove cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. The Central Government by notification can regulate these commodities in situations such as war, famine, extraordinary price rise and natural calamity. 

This amendment Bill also provides that the restrictions on stock limit shall not apply to a processor or value chain participant of any agricultural produce if it does not exceed the overall ceiling of installed capacity of processing or the demand for export in case of an exporter. This provision ensures there is no discouragement in the investment for agriculture.

This Bill seeks to curb inflation as it allows the Centre to enable control over the trade of State Governments in these commodities.  It aims to remove fears of the private investors of excessive regulatory interference in their business operations. It provides for the freedom to produce, move, hold, distribute and supply, which will lead to the harnessing of the economics of scale which will attract private sector or foreign direct investment into the agriculture sector. 

The Minister of States for Consumer Affairs, Food and Public Distribution, Shri Danve Danve Raosaheb Dadarao stated in Rajya Sabha that “This amendment is required to prevent wastage of agri-produce due to lack of storage facilities. It will create a positive environment not only for farmers but also for consumers and investors and will make our country self-reliant.” 

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The proposed amendments in this Bill will help to double the farmer’s income as it promotes investment in the agriculture sector and also promotes ease of doing business. It will strengthen the overall supply chain mechanism of the agriculture sector. It provides for liberalising the regulatory environment by the Government and ensures the safeguarding of the interest of the consumers. 

The economy of the country is adversely affected due to the pandemic situation leading to unemployment and slowdown. Farmers in India are unable to get better prices due to lack of investment in cold storage, warehouses, processing and export even though India has become surplus in most agri-commodities. They suffer huge losses when there are huge harvests, especially when the nature of the commodities are perishable. The entrepreneurial spirit gets dampened due to the present Essential Commodities Act, 1955. 

The agricultural sector in India has the potential to make a considerable contribution to economic growth. This Bill helps to boost immediate investment in the agriculture sector. The amendments in the Bill will help in increasing investment in cold storage and modernising the food supply chains. It brings about price stability helping both farmers and consumers and create a competitive market environment.

Since the passing of the Bill, there are diverse views on the proposed amendments. Some support the amendment and feel that it will help to increase the farmer’s income. It will increase investment in the agriculture sector and benefit farmers.

Some think that the amendments are vague in many ways, and it provides too much space and liberty to interpret, which may result in misusing the provisions and taking advantage of the farmers. The amendment to the Essential Commodities Act is a significant move by the Government. Whether these amendments will yield excellent or awful results to the farmers, consumers, and the economy can be known with time.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@cleartax.in