Context:

The Essential Commodities (Amendment) Bill 2020 with provisions to remove commodities like cereals, pulses, oilseeds, edible oils, onion, and potatoes from the list of essential commodities was passed.

Provisions under the Act:

• The Essential Commodities (Amendment) Act, 2020 amended the Essential Commodities Act, 1955, by introducing a new Subsection (1A) in Section 3.
• After the amendment, the supply of certain foodstuffs — including cereals, pulses, oilseeds, edible oils, potatoes — can be regulated only under extraordinary circumstances.
• It includes an extraordinary price rise, war, famine, and natural calamity of a severe nature.
• The amendment takes these items out from the purview of Section 3(1), which gives powers to the central government to “control production, supply, distribution, etc, of essential commodities”.

Significance of the Act:

• Investment in infrastructure: The legislation will help drive up investment in cold storage and modernization of the food supply chain.
• Price Stability: It will help both farmers and consumers while bringing in price stability.
• Competitive environment: It will create a competitive market environment and also prevent wastage of agri-produce that happens due to lack of storage facilities.
• Removal of excessive regulation: It will help to remove fears of private investors of excessive regulatory interference in their business operations.
• Private investment: The freedom to produce, hold, move, distribute and supply will lead to harnessing of economies of scale and attract private sector/foreign direct investment into the agriculture sector.
• Protection of consumer’s interests: The Government, while liberalizing the regulatory environment, has also ensured that the interests of consumers are safeguarded.
• Regulation during harsh situations: 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.