Cabinet approval for amendment to EC Act to deregulate 6 commodities

The Union Cabinet on Wednesday approved amendments to the six-and-a-half-decade old Essential Commodities Act to deregulate food items, including cereals, pulses, and onion, a move aimed at transforming the farm sector and raising farmers' income. The amendment provides for the regulation of food items only under exceptional circumstances like national calamities, famine with a surge in prices. Also, processors and value chain participants are exempted from the stock limit.

Announcing the cabinet decision, Agriculture Minister Narendra Singh Tomar said: "Today is a historic day. Three important decisions have been taken that will go a long way in helping farmers while also transforming the agriculture sector." The deregulation of commodities under the Essential Commodities (EC) Act is need of the hour and removes fears of private investors of excessive regulatory interference, he said. With the amendment to the Essential Commodities (EC) Act, commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes will be removed from the list of essential commodities, the government said.

The freedom to produce, hold, move, distribute and supply will lead to harnessing economies of scale and attract private sector/foreign direct investment into the agriculture sector. It will help drive up investment in cold storages and modernization of the food supply chain, it said. The government further said that while liberalizing the regulatory environment has also ensured that the interest of consumers is safeguarded.

It has been provided in the Amendment, that in situations such as war, famine, extraordinary price rise and natural calamity, such agricultural foodstuff can be regulated. However, the installed capacity of a value chain participant and the export demand of an exporter will remain exempted from such stock limit imposition so as to ensure that investments in agriculture are not discouraged, it said.

"The amendment announced will help both farmers and consumers while bringing in price stability. It will also prevent wastage of agri-produce that happens due to lack of storage facilities," it added. The amendment to the EC Act is necessary, the government said it is because despite India has become surplus in most agri-commodities, farmers have been unable to get better prices due to lack of investment in cold storage, processing and export as the entrepreneurial spirit get dampened due to hanging sword of the EC Act.

Farmers suffer huge losses when there are bumper harvests of perishable commodities. With adequate processing facilities, much of this wastage can be reduced, it added..

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