Modi govt mulls big legislative changes in Essential Commodities Act

Centre to tweak legislation to impose ESA in exceptional situation

The Modi government is planning big legislative changes in the Essential Commodities Act (ECA) to attract private investment in the farming sector.

According to the plan, all discretionary powers vested with the Central government to impose ECA through the states would be completely withdrawn and the Act would come into force only in case of three exceptional circumstances, officials said.

These include a big natural calamity, emergencies such was war or national conflict and when production of a certain commodity falls below a threshold limit, a drop of over 10- 15 per cent. 

"At present, the government has overriding powers to enforce ECA though it has been diluted a lot in the last few years, but if the present amendments are accepted, all these powers will go away,” a senior official said.

He said the basic intention behind doing away with the ECA is that there have been instances when big business houses have shied away from investing in building big farm infrastructure like storages and warehouses out of fear of clampdown by authorities under ECA.

“This would give a certain amount of certainty to the investors,” the official said.

Tweaking ECA is also part of the government’s plan to attract investments in building a national grid of warehouses and storages along the national highways.

The Essential Commodities Act was framed in 1955 to deal with chronic shortages in the economy and also prevent unscrupulous elements to take advantage of surplus and shortages by hoarding or black marketing of essential items.

It empowered the government to control the production, supply and distribution of certain items.

The Centre authorized the state governments to impose stock limits on identified food items, issue license to produce, sale and distribute under the Act.

The Narendra Modi government in its first term in 2016 had removed the licensing requirement, stock limits and movements restrictions on certain food items under ECA.

These included items like wheat and wheat products, edible oils, hydrogenated vegetable oils, onions and potatoes.

For pulses, the restrictions were removed till September 2017, while it was for different periods for other commodities.

Exporters and retailers having multiple outlets or large departmental stores, food processors and importers were also kept outside the licensing requirement, stock limits and movement restrictions under ECA as per the 2016 amendments.

But, despite the dilution, the Centre retained the overarching power to impose the various provisions of ECA as and when it deemed fit.

Officials said the current changes being contemplated will completely do away even with that discretionary power of the Central government.