Amendment to essential commodities act to promote operation of market forces
The
Essential Commodities Act, 1955 provides for the control of the production,
supply and distribution of essential commodities.
Powers to
issue Control Orders under this Act have been delegated by the Central
Government to the State Governments.
Exercising powers delegated under the Act, the State Government/UT
Administrations have issued several Control Orders to regulate various aspects
of trading in various essential commodities.
In
the context of liberalization of the economy and the changed situation,
particularly with regard to the relatively more comfortable food situation, it
has been felt that restrictions such as licensing of dealers, limits on stock
and control on movement are no longer required and only hamper the growth of
the agricultural sector and promotion of food processing industries.
The
need to relax various controls on agricultural products including controls on
inter-State Movement of such products was discussed in the Conference of Chief
Ministers held on May 21, 2001 and thereafter in the Standing Committee of some
Union Ministers and Chief Ministers which was set up pursuant to the
recommendations made in the Conference of Chief Ministers. The Standing Committee has suggested that
the Essential Commodities Act, 1955 may continue as umbrella legislation for
the Centre and the States to use when needed, but a progressive dismantling of
controls and restrictions was also required.
In pursuance of the said decision, various controls under the said Act
pertaining to licensing, stock limits and movement restrictions have already
been dispensed with in respect of agricultural products vide notifications
dated February 15, 2002 and June 16, 2003.
The
list of Essential Commodities has been reviewed from time to time with
reference to the production and supply of these commodities and in the light of
economic liberlisation. At present
there are in all 15 essential commodities; 11 commodities are listed in Section
2(a) of the Act and remaining 4 declared through Government Notifications. In tune with the present day requirements
with particular reference to pruning of the list of the essential commodities
listed in the said Act, it has been decided to amend/review some provisions of
the said Act.
It
is now universally accepted that all unnecessary and redundant restrictions,
which distort and impede operation to market forces should be removed. Such restrictions neither benefit the
producer nor the consumer. In case of
agricultural commodities, such restrictions/regulations have been adversely affecting
the interest of the farmers without any benefit flowing to the consumers. Moreover, the goal of a common Indian
market, particularly for agricultural commodities, and promotion of
agro-exports and agro processing industries will be difficult to achieve unless
and until trade and commerce is freed from such unnecessary and discretionary
restrictions.
Accordingly,
Cabinet has approved the proposal of Department of Consumer Affairs for
introduction of the Essential Commodities (Amendment) Bill, 2005 in the
Parliament seeking its approval to delete all the items listed in clause (a) of
Section 2 of the said Act and simultaneously to retain only those commodities
recommended for continuance by the concerned Ministries, namely, (i) drugs;
(ii) foodstuffs including edible oilseeds and oils; (iii) fertilizer, whether
inorganic, organic or mixed, (iv) petroleum and petroleum products; (v) hank
yarn made wholly from cotton; (vi) raw jute and jute textile; and (vii) seeds
of food crops and seeds of fruits and vegetables, seeds of cattle fodder, and
jute seeds as essential commodities which would be specified in the Schedule to
the Act. It is also proposed to give
powers to the central government to add, remove or modify any essential
commodity in that schedule. This power
will be exercised by the central government in the public interest when there
is a scarcity or non-availability of the commodity in a situation like war,
natural calamities, disruption or threat of disruption or supply of such
essential commodity which can not be tackled through normal trade channels
requiring Government’s intervention under the said Act. The central government will also specify the
reasons in the notified orders while adding/removing any commodity to/from the
said Schedule and lay every notified order made under the said provision before
both Houses of Parliament.
The
aforesaid Bill has been introduced in the Rajya Sabha on December 20, 2005.
SBK:CP:act(backgrounder)28.12
(Release ID :14624)