This article is written by Madhuresh, a student from Vivekananda Institute of Professional Studies.
Table of Contents
On 3rd June, 2020 Prakash Javdekar, Union Minister of India along with Narender Singh Tomar, Union Agriculture Minister, announced the amendments in Essential Commodities Act, 1955 that will benefit the farmers. In this amendment the Central Government by passing an Ordinance deregulated commodities such as cereals, pulses, oilseeds, edible oils, onion and potatoes. In the years after independence, India had very scarce resources of agriculture and to control the black marketing of agriculture products they were made an essential commodity so that Government can control their regulations related to marketing, pricing and stocking of products to avoid the exploitation of people. Previously in the month of March this year, Government added Face Masks and Sanitizers under the ambit of essential cawommodities. This being 65 years old legislation there is a lot of change in the current situation.
India being one of the leading exporters of agricultural products lacks Private Investment in the field of Agriculture this ordinance also tackles this issue as it will bring Foreign Direct Investments and Private Investments in the sector of Agriculture. According to the announcement made there will be no change in the Agriculture Produce Market Committee (APMC) of every state rather farmers will be allowed to sell their products without any hindrance from APMC. There are manifold benefits that will be provided with this ordinance. This will help solving the problems of farmers that they are facing from past 4-5 decades. Also Government with this introduced 2 more Ordinances that will also work for the benefit of farmers and helps in transformation of Agriculture sector.
This is a very significant ordinance at this point of time for farmers as the Agriculture Sector was degrading due to lack of new reforms with the growing need of the industry. There were many developments which lack private investments as the control was in the hands of the government. With the removal of Agricultural Products from the ambit of Essential Commodities it gives the farmers chance to earn more. It also allows them to visit markets outside their respective APMC and also get more surplus amounts for their products. This amendment creates a system where farmers can have barrier-free trade outside their markets and APMC. This ordinance forms part of the economic package announced by the Finance Minister Nirmala Sitharaman to support the poor and vulnerable, farmers etc who are affected by this pandemic outbreak. The main aim of officials to introduce this significant amendment was to help farmers getting attractive prices for their produce and also help them in reducing wastage.
Salient Changes in the act
- This helps in fighting the modern problems as earlier there was scarcity but now there is no scarcity in the agricultural industry.
- This act removes the excessive regulatory interference in this sector which attracts and motivates private investors to invest money in the industry.
- Increases investments in cold storages to protect the produce from getting damaged.
- Government helps in creation of mutual agreement with farmers that ensure them higher sale prices.
- This Ordinance provides for the freedom from the barriers laid down by APMC Act. Farmers can now sell their products where they get good price. This is a step initiated towards “One Nation One Market.”
- This helps in bringing price stability between consumers and farmers.
- This provides with the barrier free trade practices among various states. Farmers get a huge market to sell their products.
- This ordinance provides for online transaction portal to ensure seamless trading.
- This ordinance helps farmers to engage directly with wholesalers, exporters and large retailers for conducting trade.
- Farmers can directly market their products and cut the cost of intermediaries that will help them in realising full payment.
The first and main objective of this ordinance is to ensure Freedom of Farmers to trade and it reduces the restrictions laid down by the APMC. Secondly, it increases Farmers participation in carrying of trade. Thirdly it helps farmers to choose the market and also allow them to get best price for their produce. This ordinance also provides increase in investment in agriculture sector. These are certain main objectives of this ordinance as it works towards the improvement and benefits of the farmers at large and also provide them with the accurate price. It also protects them against the loss that they may suffer due to wastage of their products.
These are the main objectives of this ordinance that was introduced by the cabinet.
This amendment made by the cabinet is valid under Art 123 of the Constitution. Art. 123 provides for “Power of President to promulgate Ordinance during Recess of Parliament”. On the basis of this Article this is a constitutionally valid Ordinance.
Also Section 2(A) of ECA,1955 added by 2006 amendment provides for the powers of Central Government to either add or remove anything form the Schedule which is for Essential Commodities.
Here government by removing cereals, pulses, oilseeds, edible oils, onion and potatoes reduces all the restrictions laid down by Sec 3 of ECA, 1955. By removal of Agricultural Products from the ambit of Essential Commodities, farmers get freedom to carry on the trade. In the period after independence, due to scarcity of Agricultural Resources, India imported agricultural products. This leads to black marketing of Agricultural Products. For this reason Government took the charge of supply, stocking, price etc to maintain smooth trade of agricultural products. India now being one of the largest exportor of Agri-based products, so it should be removed from essential commodities. By this Government also provides for farmers to choose the market, consumer of the product and also get the best price available. This ordinance also leads to removal of limitation on the amount of material that can be stored. Its main aim is t improve the condition of Farmers as it is after more than 5 decades the agricultural products were removed from essential commodities. The decisions taken in this ordinance will go in a long way in favour of Indian farmers, in my opinion.
This Ordinance favours farmers as it makes them choose the market to get best price, self assess the retailers to remove intermediaries, increase in their market size, freedom to carry on trade, get good price for their yields. Along with this there were 2 other ordinances introduced to favour farmers and reform agriculture sector-
- Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020- It allows farmers to directly engage themselves with exporters, retailers, aggregators etc.
- Farmers Empowerment and Protection Agreement on Price Assurance and Farm Services Ordinance, 2020- The market unpredictability risk gets transferred from farmers. It improves their earnings and reduces the marketing cost.
In all, the decision taken by the Cabinet will help farmers to get better prices as well as bring huge reforms in the agricultural sector.
 Cabinet approves amendment to Essential Commodities Act: Key Decisions, TimesofIndia.com, June 03,2020.
 Harikishan Sharma, Explained: What is the Essential Commodities Act, and how will amending it help?, The Indian Express, June 05,2020.
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