Page 569 - ES 2020-21_Volume-1-2 [28-01-21]

196 Economic Survey 2020-21 Volume 2

APPENDIX--1

ESSENTIAL COMMODITIES (AMENDMENT) ACT, 2020

Background

The Essential Commodities (EC) Act, 1955 and the Prevention of Black-Marketing and
Maintenance of Supplies of Essential Commodities Act, 1980 are administered through
the States/UTs. “Essential commodity” under the EC Act has been defined in Section 2A as
a commodity specified under the Schedule. Presently seven commodities are included in the
Schedule of the EC Act viz., (1) Drugs; (2) Fertilizer, whether inorganic, organic or mixed;
(3) foodstuffs, including edible oilseeds and oils; (4) hank yarn made wholly from cotton; (5)
petroleum and petroleum products; (6) raw jute and jute textiles; (7) (i) seeds of food-crops and
seeds of fruits and vegetables; (ii) seed of cattle fodder; (iii) jute seed; (iv) cotton seed.

The Essential Commodities Act, 1955 empowers the Government to regulate essential
commodities through regulation, by licences, permits, control of prices at which bought or sold,
prohibiting/ withholding from sale collection of any information/ statistics, inspection of books
and accounts etc. for maintaining or increasing their supplies and for securing their equitable
distribution and availability at fair prices. Controls order dated 29.09.2016 has removed licensing
requirements, stock limits and movement restrictions on identified foodstuffs unless expressly
provided for. Under enabling orders a State may impose licensing, permits and other control
measures. In respect of ‘Foodstuffs’ most of the powers of Central Government under the Act,
have been delegated to the State Governments vide order dated 09.06.1978 and for ‘other than
foodstuffs’ vide order dated 30.11.1974 with the direction that they shall exercise these powers.
Exercising powers under the Act, various Ministries/Departments of the Central Government and
State Governments/UT Administrations have issued Control Orders for regulating production,
distribution, pricing etc. and trading of the commodities declared as essential.

Amendments to the EC Act
Recently, Government of India has amended the Essential Commodities Act of 1955 and inserted
a new sub-section (1A) in Section 3 of the Essential Commodities (EC) Act, 1955.

Section 3(IA) (a) now provides that foodstuffs, including cereals, pulses, potato, onions, edible
oil seeds and oils shall only be regulated under extra ordinary circumstances which may include
war, famine, extra ordinary price rise and natural calamity of grave nature.
Section 3(IA)(b) provides that any action on imposing stock limit would be based on price
trigger such as hundred per cent increase in retail price of horticultural produce and fifty percent
increase in retail price of non-perishable agricultural foodstuff over the immediately preceding
twelve months or average retail price of last five years whichever is lower; there is suitable
exemption for exporters, processors and value chain participants of any agricultural produce as
well as the Public Distribution System.

The Amendment includes a definition of value chain participants covering all the entities who
add value to each stage from production to consumption. It is a visionary step, one which would
radically alter the incomes and growth prospects of farmers and incentivize investment in the
entire agri-sector.