ECA Amended, Agriculture Liberalised

Essential Commodities Act (ECA) amended in wake of Covid-19

The Indian government removed a few commodities from the ambit of Essential Commodities Act (ECA), 1955. The move is aimed to power the farmers by allowing them to sell the produce in the open market without restrictions at a time when the pandemic has the Indian economy in its clutches.

Crux of the Matter

What is Essential Commodities Act?
Essential Commodities Act (ECA) was enacted in 1955 at a time when the country’s agricultural production was low and India even had to import wheat. The aim of the act was to prevent black marketing and hoarding of essential agricultural and other commodities. The Act means that any commodity under its ambit can be regulated by the government. The regulation includes controlling the production, distribution, and supply of the commodity. The government may also impose stock limits on such commodities during times of natural calamities, droughts, war, or unusual price rise.

Freedom to Farmers
At a time when the economy is in the clutches of Covid-19, government has decided to remove some items from the ambit of ECA. Those excluded include:
– cereals
– pulses
– oilseeds
– edible oils
– onions
– potatoes

The move is important as farm products were restricted to be sold to registered licensees of the state government. Agricultural Produce Market Committees (APMCs) are vested with the power of creating an agricultural market and deciding its players. They also decide who the farmers sells to and who can participate in the market. Due to such immense powers and information asymmetry in the market, many experts term APMCs as a bottleneck.

However, with the removal of products from the ambit of ECA, farmers are delinked from the APMCs for selling the mentioned commodities. Farmers can now store and sell the commodities across India and even export them. They will not be taxed for selling outside APMCs.

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