Page 31 - Banking Finance May 2022

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in previous times and black-marketing, which were the root (ii) Fifty per cent increase in the retail price of non-
cause for the then Government to bring the Essential perishable agricultural food stuffs.
Commodities Act, 1955. There were number of incidences
in the past where the prices of essential commodities was Over the price prevailing immediately preceding twelve
in rise and Government has stepped in and took measures months, or average retail price of last five years whichever
to control the hoarding and export of such items and made is less".
the commodity available to general public at a reasonable
or affordable price. With the above amendments to the Essential Commodities
(Amendment) act, 2020 it is pretty clear that Government
In the economy survey 2019-20 presented by the Chief wants to give the corporate players a greater scope in
Economic Adviser Mr.K V Subramanian. It was expressed building the agriculture infrastructure and also give more
that "The Indian economy is replete with examples where freedom in dealing with the agriculture produce. This can
Government intervenes even if there is no risk of market be viewed as a big opportunity for agriculture sector, but
failure, and in fact, in some instances its intervention has may create a situation wherein this may give rise in
created market failures". corporate monopoly in dictating the prices of these
commodities as they have resources and machinery to build
The Survey has also expressed that the measures to control facilities to hold the stock as there is no restriction in storage
stocks and prices of essential commodities like vegetables, as per the present amendment.
pulses and medicines had unintended effects like market
distortions and price hikes of these products. It also has been The Government has come up with another
felt that the main purpose for which Essential Commodities act -
Act, 1955 was brought in to see that the poor get
commodities at reasonable prices and restrict hoarding, but THE FARMERS'PRODUCE TRADE AND COMMERCE
this resulted in creating market distortions that have (PROMOTION AND FACILITATION) ACT, 2020
prevented the efficient development of agricultural markets. The Act is about "to provide for the creation of an
ecosystem where the farmers and traders enjoy their
The recent incidents where restrictions were imposed in freedom of choice relating to sale and purchase of farmers'
holding stock limits to prevent hoarding of Onions due to produce which facilitates remunerative prices through
rise in prices in September, 2019 had limited success, as there competitive alternative trading channels; to promote
was no effect in controlling the prices. There is also a view efficient, transparent and barrier-free inter-state and intra-
point that with the imposition of limits of stock that a state trade and commerce of farmers 'produce outside the
producer or wholesaler can store has discouraged physical premises of markets or deemed markets notified
investment in warehousing and storage facilities, which under various State agricultural produce market legislations;
could otherwise be very effective method of overall
development in rural areas.

The above incidents might be some of the reasons which
have definitely promoted the Government in coming up with
recent amendment to the Essential Commodities Act ,2020
and the new amendment has also made a distinction
between the hoarders and the firms that genuinely need to
hold the stock for further processing or adding value. The
act has also made it clear that "any action on imposing stock
limit shall be based on price rise and an order for regulating
stock limit of any agriculture produce may be issued under
this Act only if there is -
(i) Hundred per cent increase in the retail price of
horticultural produce or

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