News Highlights
With Tur and Dal prices surging and traders creating an artificial supply squeeze by restricting sales, as a result The Centre has invoked the Essential Commodities Act of 1955.
Key Takeaways
- The central government ask States to monitor and verify the stocks available with such traders.
- Tur dal prices have risen amid slow progress in Kharif sowing as compared to last year.
- It is due to excess rainfall and water logging conditions in parts of the major tur dal growing states of Karnataka, Maharashtra and Madhya Pradesh.
- States and Union Territories have also been asked to direct ‘stockholder entities to upload the data of stocks held by them’ on an online monitoring portal of the Department of Consumer Affairs, every week.
What is the Essential Commodities Act?
- The ECA was enacted way back in 1955.
- It has since been used by the government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.
- The list of items under the Act includes drugs, fertilisers, pulses, edible oils, and petroleum and petroleum products.
- The center can include new commodities when the need arises and take them off the list once the situation improves.
- Under the Act, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity.”
How does it work?
- If the centre finds that a commodity is in short supply and its price spikes, it can notify stock-holding limits on it for a specified period.
- The states act on this notification to specify limits and take steps to ensure that these are adhered to.
- Anybody trading or dealing in a commodity, be it wholesalers, retailers, or even importers, is prevented from stockpiling it beyond a certain quantity.
- A state can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity into the market.
Importance of the Act
- The ECA gives consumers protection against irrational spikes in the prices of essential commodities.
- The government has invoked the Act umpteen times to ensure adequate supplies.
- It cracks down on hoarders and black-marketeers of such commodities.
- State agencies conduct raids to get everyone to toe the line, and the errant are punished.
The Essential Commodities (Amendment) Bill, 2020
- This Bill seeks to introduce a new Subsection (1A) in Section 3.
- It aims to deregulate commodities such as cereals, pulses, oilseeds, edible oils, onions, and potatoes.
- It takes these items out of the purview of Section 3(1).
- The Bill states that such an order for regulating stock limit shall not apply to processors and value chain participants of any agricultural produce under a condition.
- Such order shall not apply if the stock limit does not exceed the overall ceiling of installed capacity of processing or the demand for export.
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Content Source: The Hindu