Recent Changes in the Essential Commodities Act, 1955


This article has been written by Pallavi Meena & Siddharth Kumar students at

Gujarat National Law University, Gandhinagar



Introduction


The Essential Commodities (Amendment) Bill was presented to replace the ordinance promulgated in June 2020, has sparked agitation by large chunk of farmers. The Essential Commodities (Amendment) Bill was one of the three key farm bills passed in the Parliament. One of the controversial aspects relating to the passing of the bill was that, it was passed by the upper house (Rajya Sabha) only through voice vote. The bill is said to introduce amendment in the Essential Commodities Act 1955 which deals with the control of the production, supply and distribution of certain commodities.[1] The new bill proposes to remove cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. The bill is also aimed at removing fears of private investors of excessive regulatory interference in their business operations.



History Background of Essential Commodities Act


The Essential Commodities Act, 1955 roots can be trace in Defence of India Act, 1939 which was made to regulate certain specific commodities during World War Second. Thereafter, Defence of India Act, 1939 ceased to exist in 1946, but it seems important to regulate certain essential commodities in the interest of the general public. Therefore, The Essential Supplies (Temporary Powers) Ordinance passed in 1946, which was subsequently replaced by the Essential Supplies (Temporary Powers) Act, 1946 and which was extended for two years more.[2] When India become independent and adopted a new constitution for independent India there was nothing which dealt with regulation of essential commodity. Later, on when the need was felt, a new entry was done on third list (concurrent list) of seventh schedule of the Constitution which states that trade and commerce in, and the production, supply and distribution of items such as cattle fodder, raw jute, raw cotton, etc will be the current subject and both union and state government can make laws on them.[3] At last, the Essential Commodities Ordinance was passed, which was subsequently replaced by the present Act namely, The Essential Commodities Act, 1955.



What were the changes done by the Amendment?


As per the amendment, a new sub-section 3(1A) in Essential Commodity Act, 1955 which empowers central government to regulate supply of certain foodstuff such as cereals, pulses, potato, onion, edible oilseed and oils only under extraordinary circumstances which may include war, famine, extraordinary price rise and natural calamity of grave nature.[4] Further imposition of stock limit on cereals, pulses, potatoes, onions, edible can be done only if:

(i) There is hundred per cent increase in the retail price of horticultural produce;[5] or

(ii) If there is fifty per cent increase in the retail price of non-perishable agricultural foodstuffs[6].

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.[7] The Ordinance provides that any stock limit will not apply to a processor or value chain participant of agricultural produce if stock held by such person is less than the: (i) overall ceiling of installed capacity of processing, or (ii) demand for export in case of an exporter.[8] To explain the meaning of “value chain participant” an explanation is also added that defines it as a person engaged in production, or in value addition at any stage of processing, packaging, storage, transport, and distribution of agricultural produce.[9] The proviso inserted on by this amendment very clearly states that this amendment in no way going to effect the Public Distribution System or the Targeted Public Distribution System.


Possible Benefits


As per the government officials and experts the recent amendment will help in commercialization in agricultural sector, as this will be going to improve trust of investor and bring investment in agricultural sector. This is one more step of government to unlock the “excessively” regulated markets in the country. Over the period of time the requirement of opening the markets by reducing the unnecessary bottleneck is felt. Describing the Essential Commodity Act as “anachronistic”, the Economic Survey 2019-20, too, recommended the “jettisoning” of this law.[10] Therefore, this amendment is one step in the direction of agricultural reform by way of giving a free market and limit the regulation only in certain circumstances only.


Possible Harms


According to some agricultural experts, this amendment in essential commodity act will lead to corporation of the agricultural sector. It is also assumed that hoarding of the essential commodity will be dangerous step in direction of food security. As the stock limit has been removed, it may amount to harmful repercussion on the lower strata of the society. The sudden removal of government regulation and involvement of the private players can lead to exploitation of the common man by frequent fluctuation of the price according to the whim and fences of intermediary. As these commodities are very essential in nature, can not be avoided by a common man. There are high chances that systematic manipulation of price can be done by the ‘middle men.’ Moreover, there was a contention raised that agrarian economy might fall into ruins, if it is looked in holistic view with other contemporary reforms.


Conclusion


While the entire nation has been immensely affected by the COVID-19 pandemic, the government has made an amendment which would have a great impact on the lives of farmers. Amidst the rising competitive world, a common man fears that he might get crushed under the shadows of corporate sector. However, there are always two sides of the coin, wherein the government has entitled the amendment as an important reform in the agricultural life and economy of the nation. The constitutional validity of ECA can be questioned on the account of violation of fundamental rights of the farmers and is entitle to judicial review. Although, it may subject to reasonable restriction by the court. On the other side, Parliament is accountable to the needs of the people. In its approach, it must ensure growth in economy as well as in agrarian sector without violating the rights of its citizens.


References

[1] “Explained: Why Essential Commodities Act amendment a double-edged sword”, The Week, September 23, 2020. [2] An overview of the Essential Commodities Act, 1955, available at https://blog.ipleaders.in/overview-of-the-essential-commodities-act 1955. (last visited on 7th January,2020) [3] The Constitution (third Amendment) Act, 1954. [4] The Essential Commodity Act, 1954 (Act No. 10 of 1955), s. 3(IA)(a). [5] The Essential Commodity Act, 1954 (Act No. 10 of 1955), s. 3(IA)(b)(i). [6] The Essential Commodity Act, 1954 (Act No. 10 of 1955), s. 3(1A)(b)(ii). [7]The Essential Commodities (Amendment)Bill, 2020available at : https://www.prsindia.org/billtrack/essential-commodities-amendment-bill 2020. (last visited on 7th January’2020.) [8]The Essential Commodities (Amendment) Ordinance, 2020” available at: The Essential Commodities (Amendment) Ordinance, 2020 | PRSIndia. (last visited on 7th January’2020) [9] Id. [10] Editorial, “Cabinet amends Essential Commodities Act, approves ordinance to ease barrier-free trade” The Indian Express, June 3, 2020.


Disclaimer: This article is an original submission of the Author.

NLR does not hold any liability arising out of this article.



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