Post-independence, India was going through a time of random supplies and a deficit in various commodities & products. The Essential Commodities Act (ECA) was enacted in 1955, to control any scope of hoarding and black marketing by opportunistic speculators, who could and would aggravate the prevailing supply shortfall to manipulate market prices. The ECA 1955, allows the central and state governments to regulate and control production, distribution (storage and transport) and trade & commerce of commodities that are declared essential. Earlier, the list of essential commodities also included coal, coke & derivatives; accessories & parts of automobiles; cattle fodder/oilcakes; raw cotton; cotton/woollen textiles; iron & steel including manufactured products; paper, newsprint, etc. – these no longer feature in the list of essentials. The supply of these items are no more in deficit and there is healthy competition in their supply chains. Under the Essential Commodities Act 1955, and as amended in 2006, the Central Government may add or remove any commodity from the scheduled “essential commodity” list in consultation with state governments. A commodity may also be declared essential for a limited time period not exceeding 6 months, though extendable. The Central Govt., can also exercise its powers to add or remove commodities that are in item 33 of Concurrent List (List III of Seventh Schedule to the Constitution), ie. products of any industry & imported goods of same kind, foodstuffs (3 above), raw jute, etc. Currently, there are seven (7) commodities that are scheduled essential. 1. Drugs; 2. Fertilizer, whether inorganic, organic or mixed; 3. Foodstuffs, including edible oilseeds and oils; 4. Hank yarn made wholly from cotton; 5. Petroleum and petroleum products; 6. Raw jute and jute textile; 7. (i) seeds of food-crops and seeds of fruits and vegetables; (ii) seeds of cattle fodder; (iii) jute seeds; and (iv) cotton seed. A Control on any essential commodity can include – regulating production or manufacture; b. expand cultivation area for food crops in general; c. control of buy/sell prices; d. regulating storage, transport, acquisition, consumption; e. prohibiting the withholding from sale; f. requiring to sell in whole or part stock or on receipt of goods; g. regulate or prohibit any class of commercial/financial transactions of foodstuffs; h. collecting any information or statistics of aforesaid; i. maintain and provide accounts/books/records or such information as may be specified; j. entry, search, examine premises or any conveyance; confiscate goods, seize documents and/or forfeit the conveyance (aircraft/vessel/vehicle/animal); Centrally, this Act is administered by Department of Consumer Affairs, primarily to maintain or increase supplies, or to secure equitable distribution and availability at fair prices. The stock limit or inventory thresholds are imposed through Control Orders issued by the States, from time to time. This can be sudden and as less as a hundred kilos. The power to make orders or issue notifications are delegated to an officer or subordinate authority of central govt, or state govt. In case of foodstuffs, when required to sell existing stock, a control price is determined by factoring the average “fair & remunerative” price – distinctions apply in determining price of foodgrains, edible oilseeds/oils and sugar. The control price so determined is final, and cannot be called to question in any court. Under the Act, an Order has effect notwithstanding inconsistency with any other enactment or instrument. No suit/prosecution shall lie against govt. or person acting in good faith in pursuance of the Control Order. Offences under ECA are cognizable and the burden of proof is on the person being prosecuted. These overarching aspects make the ECA 1955 a highly restrictive and draconian imposition, and made by officers who do not fully understand the intricacies of involved supply chains. Yet, current day context is where growth in trade is of utmost priority. In Sept 2016, Government did issue an Order, “Removal of Licensing Requirements, Stock limits and Movement Restrictions on Specified Foodstuffs Order, 2016”, allowing dealers to freely buy, stock, sell, transport, distribute, dispose, etc., any quantity in respect of specified food items, including wheat, paddy, coarsegrains, gur, pulses, onion, etc. without requiring any license or permit under any order issued vide the ECA Act. Yet, the above order can be cancelled at any time, and all Controls imposed again, until the ECA 1955 is amended. The government has announced its intention to amend the Essential Commodities Act, 1955, all together. The Reasons & Benefits to amend ECA, 1955: The ECA needs clarity – from the perspective of the agricultural sector, the term Essential must be clarified – it is inferred from perspective of consumers only and not that of other stakeholders, the term Public interest be made inclusive – it excludes interest of farmer producers, though 67% of the public is rural-agrarian, the term Fair price must consider price to farmers – it is perceived from prism of consumers, ignoring price to farmers at farm-gate. The periodic imposition of licensing, and of controls, has served to dissuade the agri-businesses from building any long term relationships, domestic or international, and leaves the agricultural supply chain opportunistic in nature. The controls, also allow the imposing of unwarranted diktats on the agricultural supply chain, unable in long term planning and unorganised in functioning. The ECA Controls have a short term agenda, and the capacity of the supply chain eco-system is constrained in developing in a planned or scientific manner. Allowed to be inconsistent and varied across state borders, the control orders disallow the agricultural supply chain from aiming at a one-India market. In accordance, the agricultural supply chains are also hampered in building long term linkages with international markets. In reality, what was once tagged ‘essential commodity’ has also undergone change as consumption shifts and supply abundance are increasingly evident. In current context and in order to facilitate free flow of market forces, the rationalising and progressive dismantling of this system of control, which restricts the agricultural economy, must be designed carefully for the overall benefit of both the farmers and consumers. Nevertheless, doing away completely with all controls is not recommended, though any form of control that remains should be transparent and equitable in purpose. Certain amendments that could be considered: Classify the essential commodities into two priority classes- 1. Priority one (1) – normally controlled commodities, such as- a. Drugs – essential for chronic diseases,
