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Lok Sabha clears Essential Commodities (Amendment) Bill, 2020

The Essential Commodities (Amendment) Bill, 2020 allows the central government to regulate the supply of some food items only under extraordinary circumstances which include famine, war, the natural calamity of grave nature, and extraordinary price rise.

Sep 16, 2020 12:40 IST
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Lok Sabha passed the Essential Commodities (Amendment) Bill, 2020 on September 15, 2020. The bill, which will replace the ordinance, provides that the stock limits can be imposed on the agricultural produce only if there is a steep price rise.

The Essential Commodities (Amendment) Bill, 2020 allows the central government to regulate the supply of some food items only under extraordinary circumstances which include famine, war, the natural calamity of grave nature, and extraordinary price rise.

Objective of Essential Commodities (Amendment) Bill:

The bill passed in the Lok Sabha seeks to amend the Essential Commodities Act, 1955, and empowers the government in terms of supply, production, trade, distribution, and commerce of certain commodities.

The passed bill also seeks to increase the competition in the agricultural sector and will help to increase the farmer’s income. It aims to liberalize the regulatory system while also protecting the interests of the consumers.

What will change with the Essential Commodities (Amendment) Bill, 2020?

The latest bill will empower the central government to designate certain commodities including fertilizers, food items, and petroleum products as the essential commodities.

Supply of certain food items including pulses, cereals, onions, potato, oils, and edible oilseeds can be regulated by the central government under the extraordinary circumstances as per the provisions of this bill.

The extraordinary circumstances include famine, war, natural calamity, and the extraordinary rise in prices of the commodities.

The Essential Commodities (Amendment) Bill, 2020 also empowers the central government to regulate the stock of an essential commodity that a person can hold.

The provisions of the bill regarding the regulation of the food items and the imposition of the stock limits will however not be applied to any government order relating to the Targeted Public Distribution System and Public Distribution System.

Statement of the reason for passing the amendment bill:

As per the statement of the objects and reasons of the bill, India has become surplus in most of the agricultural commodities but farmers still have been unable to get the better prices due to the lack of investment in warehouses, cold storages, export, and processing as entrepreneurs get discouraged by the regulatory mechanisms in the Essential Commodities Act, 1955.

The High- Powered Committee of the Chief Ministers, who examined the issue, also recommended the removal of stringent restrictions on the stock movement and the price control on agricultural products for attracting private investments in agricultural infrastructure and marketing.

As the economy has been adversely affected due to the COVID-19 pandemic, the bill highlights that the agricultural sector has the potential of making a significant contribution to economic growth.

It further states that to boost immediate investment in this sector, enhance farmer’s income and increase competition, there has been a need to create an environment which is based on ease of doing business and also removing the fear of frequent statutory controls under the Essential Commodities Act.

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