Amendments to be made in Essential Commodities Act

Trading in all essential commodities in futures market to be banned

The Ministry of Consumer Affairs has prepared a set of recommendations to amend the Essential Commodities Act, 1955.

One of the significant recommendations for such amendment is categorical insertion of a clause on banning trading of essential commodities including food stuff in the futures market except for those specifically notified.  Earlier such clause was not present in the Act while any decision involving trading of any essential commodities used to be placed before cabinet committee for prudence and legal sanctity.

However according to officials close to the development, this clause is preferred keeping in view the food security bill which needs the government to ensure mass consumption. However for some commodity, which  lies in surplus, future trading may be allowed , primarily for price discovery. However as a policy, trading in essential commodities need to be banned.  Some of the essential commodities currently  traded on commodity exchanges are wheat, oilseeds, some oilcake, cotton, steel, edible oilseeds, sugar and potato etc. For the purpose of banning the essential commodities , the list will be enhanced by including specified food stuff. The list of food stuff will be notified later.

The list of the essential commodities will be also enhanced by defining food stuff. As per the new definition, food stuff will mean any substance, whether  perishable or  non perishable  which is used as a final food product  by human beings  and will also include raw  food articles  that may be used as food by human beings.

The offences under this act have been made non bailable.  A non bailable offense is one where the accused  does not get the bail as a mandatory right but it is at the discretion of the court  and court if decides the bail , it is contingent upon certain terms and conditions.

A bid overhaul has been proposed  to  check hoarding of  essential commodities . While admitting it to be a herculean task to begin with, the amendment proposes to make every farmer- trader transaction across the country reportable to a government authority.  Similarly, every dealer  of  non perishable essential commodity  has to register  to an authority.

In the month of July, 2014, the Act was in the limelight, as the Government made it more stringent by bringing onions and potatoes under its purview.

In 2010, the government had formed a working group affairs headed by the then  Gujarat chief minister  with a mandate to review the essential commodities Act and suggest agricultural market reforms for bridging the gap between farm gate and retail prices.

Along with Gujarat Chief minister , other members of the committee were chief minister of Andhra Pradesh, Maharashtra and Tamil Nadu.  These amendments emanate from the recommendations of this committee which had been submitted to the government in 2012. After that a working group was formed that suggested these amendment s to the existing Act.  Essential commodities (EC) Act 1955 was enacted to ensure easy availability of essential commodities to consumers and to protect them from exploitation by unscrupulous traders.

The EC Act was empowered with special provisions — Essential commodities (Special Provisions) Act, 1981 and came into force for a period of five years and later continued with ordinance up to 1998. EC 1981 had strong punitive measures including trial of all offences, minimum mandatory imprisonment, making offences non bailable, sale of seized essential commodities at government fixed prices and appeal against order of confiscation passed by collector to be made to states instead of judicial authority.

In 2002, it was decided to remove licensing requirement, stock limits and movement restrictions and an amended EC came into force in 2005 with only seven items under its ambit- drugs, fertiliser, food stuffs including edible oil, hank yarn, petroleum and petroleum products, raw jute and jute textile, seeds of food crops, cattle fodder, jute and cotton.