The Essential Commodities (Amendment) Bill, 2021 and Its Impact on the Agriculture Commerce

While India has become surplus in most Agri-commodities, farmers are unable to earn better prices, thanks to lack of investment in cold storage, warehouses, processing, and export which results in the entrepreneurial spirit getting dampened thanks. Even though there are bumper harvests, farmers suffer a huge loss due to inadequate arrangements. With the advent of the new Act, legislation will help approach investment in cold storage and modernization of the food supply chain. It'll help both farmers and consumers while bringing in price stability and will create a competitive market environment and also prevent wastage of agri-produce that happens because of lack of storage facilities.

The ECA, 1955 came to curb inflation by empowering the Central Government to access control by state governments of trade in a good sort of commodities. The states brought a stock limit to curb the movement of any commodity which was essential. It helped to discourage hoarding of things, including food commodities, like pulses, edible oils, and vegetables. However, the Economic Survey 2019-20 highlighted that government intervention under the ECA 1955 often distorted agricultural trade while being ineffective in curbing inflation. Such interference fixes allow chances for rent-seeking and pestering. Rent-seeking may be a term employed by economists to explain unproductive income, including corruption. Traders tend to shop for far but their usual capacity and farmers often suffer huge losses during surplus harvests of perishables, since large stocks held by traders are often outlawed under the ECA 1955 anytime.

This led to farmers being unable to urge better prices thanks to a lack of investment in cold storage, warehouses, processing, and export. Also with the Food Corporation of India (FCI) controlling stocks before, there have been less investment and buyers.

Why it is needed and its benefits 

The Vital Merchandises (Amendment) Beak 2020 goals to omit merchandise like mueslis, beats, oilseeds, comestible oils, onion, and potatoes from the vital merchandise list. Earlier, the bill was introduced by the Minister of State for Consumer Affairs, Food & Public Distribution, Shri Danve Raosaheb Dadarao within the Lok Sabha on 14th September 2020 to exchange ordinances promulgated on 5th June 2020. The bill was assented by Lok Sabha on 15th September 2020.

The EC (Alteration) Beak 2020 goals to get rid of doubts of individual savers of extreme controlling meddling in their commercial processes. The liberty to supply, hold, move, distribute and provide will cause harnessing of economies of scale and attract private sector/foreign direct investment into the agriculture sector. It'll help approach investment in cold storage and modernization of the food supply chain.

By liberalizing the regulatory changes, the Government has also promised to safeguard the interests of the consumers. It's been provided within the Amendment, that in situations like war, famine, extraordinary price rise, and natural calamity, such agricultural foodstuff is often regulated. However, the installed capacity of a worth chain participant and therefore the export demand of an exporter will remain exempted from such stock limit imposition so on make sure that investments in agriculture aren't discouraged.

Replying to the discussion on the Bill before it had been passed by the Rajya Sabha, Minister of States for Consumer Affairs, Food & Public Distribution Shri Danve Raosaheb Dadarao said that this Amendment is required to stop wastage of agri-produce caused by the lack of storage facilities. He said this amendment will create a positive environment not just for farmers but also for consumers and investors and can make our country self-reliant. He said that this amendment will strengthen the general supply chain mechanism of the agriculture sector. This amendment also will help to realize the government’s promise to double the farmer’s income by promoting investment during this sector and promote simple doing business.

It is expected that the ease to hold, move, distribute and supply provided by the Act will increase the influx of the private sector as well as a foreign capital investment which will help in harnessing the economy. There will be modernization of the cold storage supplies and infrastructure for the better arrangements of the production. This will result in the least wastage of the commodities which is caused due to inadequate storage facilities. These all advancements will make a competitive market and will benefit both, the farmers and consumers through price stability. 

Conclusion 

There are some concerns raised as well regarding the Act that there will be a highly centralized law and can infringe upon the States’ powers, as they're going to not be ready to regulate let say the menace of hoarding, black marketing, etc.

The stock limit relaxations under the ECA may cause black marketing and hoarding instead of benefiting the producers. It may cause an increase in inflation and monopoly of few individuals over prices of certain goods. On the other hand, it can be said that ECA 1955 was brought when India wasn't independent in food grains production. But now India has become surplus in most agri-commodities, and therefore the amendments within the ECA 1955 is a crucial step by the government to realize its target of doubling farmers’ income and also for simply doing business.

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