From UPSC perspective, the following things are important :
Prelims level : EC Act
Mains level : Regulation of essential commodities
As the Union government announced massive reforms as a response to the coronavirus pandemic. All attention went to three agriculture sector ordinances related to farmers’ trade, contract farming and amendments in the Essential Commodities Act.
Try this question for mains:
Q.Discuss how Essential Commodities Act works to maintain fair prices of commodities for consumers.
Recent amendment to the EC Act
- Recently, the Centre notified an Amendment Ordinance to the EC Act.
- A new sub-section 1A in Section 3 of the act stipulated control orders — with respect to the supply of certain foodstuffs was added.
- It would be issued only under extraordinary circumstances that may include war, famine, extraordinary price rise and natural calamity of grave nature.
An order for regulating stock limit of any agricultural produce may be issued only if there is:
- A full increase in the retail price of horticultural produce, or
- A 50 per cent increase in the retail price of non-perishable agricultural food items over the price prevailing immediately preceding a year or the average retail price in the past five years, whichever is lower
The Essential Commodities Act
- The EC Act, 1955 was enacted at a time when the country faced an acute shortage of several commodities, especially food items.
- Under the act, an ‘essential commodity’ is a commodity specified under the schedule of the Act.
- The Union government is empowered to amend the schedule to add or remove a commodity to said schedule in the public interest and in consultation with state governments.
- The schedule was amended recently in March 2020, when the Centre declared face masks and hand sanitisers as essential commodities and fixed their prices.
Issues over the amendment ordinance:
1. Ordinance route and federalism
- Though agriculture is a state subject, the concurrent list empowers the Centre to legislate on production and trade and supply of foodstuffs.
- By taking the ordinance route, a clear attempt was made to bypass the parliamentary process.
- When a proposed amendment is introduced in Parliament, it is open to debate, scrutiny, comments and valuable inputs from stakeholders before being passed.
2. Surpassing concerns
- Critical legislation like this should certainly have been put before Parliament.
- The Sarkaria Commission report on Centre-state relations pointed out that the Centre disproportionately empower itself in the sphere of agriculture.
- The power of the Centre in agriculture management has certainly increased through this ordinance.
- States like Tamil Nadu and West Bengal have repeatedly called for transfer such entities from the Concurrent to the State list.
3. Constitutional validity and Ninth Schedule
- The constitutional validity of price fixation under the act was in question before the Supreme Court in the Prag Ice and Oil Mills case, 1978.
- It was observed that the dominant purpose of price fixation was to ensure availability of essential commodities to consumers at a fair price.
- It was also held that availability of an essential commodity to the common man, at a fair price, must rank higher than any other consideration.
- The Essential Commodities Act is enlisted under the Ninth Schedule of the Constitution. This does not, however, mean it is outside the scope of judicial review.
4. EC Act is no exception
- The Ninth Schedule came under scrutiny after the landmark IR Coelho, 2007 judgement.
- The Supreme Court said the laws inserted in it after April 24, 1973 — the day the Kesavananda Bharti verdict was pronounced — are also open to judicial review if they are violative of the basic structure of the Constitution.
- Farmers may approach the Supreme Court if they feel laws such as the Essential Commodities Act violate their fundamental rights under Articles 14, 19, 21 or 32.
5. Questions over the amendment
- The ordinance does not expressly define ‘extraordinary circumstances’, which ‘may’ include war, famine, extraordinary price rise and natural calamities of a grave nature.
- Even in extraordinary circumstances, the government only ‘may’ choose to exercise regulation.
- Such legislative ambiguity makes one question the entire exercise of introducing this particular provision.
6. Farmers stake are still at risk
- Drastic changes such as the removal of stock limits and exemption to exporters, traders and value chain participants may not help farmers directly.
- Big corporates and MNC may prefer to stock up their quota at the time of harvest when prices are low and, thus, would not need to buy from farmers when prices rise.
- If farmers decide to retain produce for later, prices may not go up or the private sector may not enter the market to purchase.
- India no longer faces food shortage problems, according to the Economic Survey, 2020.
- What is seemingly ignored, however, is the population of India increased to 1.3 billion in 2020 from 360 million in 1951.
- There are more mouths to feed and the responsibility of ensuring food security to the masses cannot be shunned.
- Sights of migrants scraping for morsels of food during the COVID-19 crisis continue to haunt.
- Our policies, thus, must ensure sustainable farm growth taking into consideration factors like climate change, land holdings, consumer capacity and farmers’ interests.