Recently, the Ministry of Consumer Affairs, Food and Public Distribution invoked the Essential Commodities Act of 1955 to control the rising prices of tur dal. As per this directive, all states and Union Territories were asked to instruct stockholder entities to regularly update the data of their stocks on an online monitoring portal managed by the Department of Consumer Affairs.
The Rationale for Invoking the Essential Commodities Act
The prices of Tur have been escalating since mid-July 2022 due to a slow progress in Kharif sowing compared to the previous year in 2021. This was caused by excessive rainfall and waterlogging in the major Tur-growing states of Karnataka, Maharashtra, and Madhya Pradesh. To prevent any unwarranted price hike in the upcoming festival months, the government has initiated several steps to ensure availability and controlled prices of pulses both domestically and internationally. Notably, the aim is also to deter traders and stockists from creating artificial scarcity through restricted sales, causing a rise in Tur dal prices.
Understanding the Essential Commodities Act 1955
The Essential Commodities Act (ECA) 1955 was enacted at a time when India was grappling with food scarcity due to persistent low levels of food grain production. As a measure to prevent hoarding and black marketing of food items, this act was introduced. The ECA 1955 provides the central government the power to add or remove an item from the list of essential commodities, primarily in the public interest. A commodity is declared essential to control its production, supply, distribution, and impose stock limits.
Debating Issues Related to the Essential Commodities Act 1955
The Economic Survey of 2019-20 pointed out that the implementation of the ECA 1955 often resulted in a distortion of agricultural trade and an inability to control inflation. Traders usually end up buying less than their usual capacity, causing large-scale losses to farmers, especially during surplus harvests of perishable items. The lack of investment in cold storage facilities, warehouses, processing units, and exports has made it difficult for farmers to receive better prices. As a response to these challenges, the Parliament passed the Essential Commodities (Amendment) Bill 2020. However the government had to repeal this law due to protests by farmers.
Future Prospects for the Essential Commodities Act
When the ECA 1955 was first introduced, India was hugely dependent on imports and assistance for food grains. Today, India produces a surplus of most agricultural commodities. The proposed amendments to the ECA 1955 mark a significant effort by the government towards doubling farmers’ income and easing business regulations. Despite the challenges, the future of the essential commodities act looks promising for both consumers and producers alike.