The Essential Commodities Act is currently under review for necessary amendment. To this effect, the government has formed a working group on consumer affairs headed by Gujarat chief minister which has a mandate to review the essential commodities Act and suggest agricultural market reforms for bridging the gap between farmgate and retail prices.
Chief minister of Andhra Pradesh, Maharastra and Tamil Nadu are other members of the working group which will submit its report to the prime minister in January 2011, official sources said.
Official sources said the working group would review the essential commodities based on the recommendations made by the conference of chief ministers in February 2010.
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 offenses, minimum mandatory imprisonment, making offenses 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..
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The proposal under considerations now are reintroduction of Essential Commodities (Special Provisions) Act 1981, amendments to provisions of prevention of black marketing and maintenance of supplies of essential commodities (PBMMSEC) Act to provide stringent punishment. To check hoarding and undue profiteering, it is proposed to authorise states governments to issue control orders prescribing ceiling of retain prices of commodities / maximum profit margins on wholesale and retail trade in essential commodities.
To reduce the gap between wholesale and retail prices, the suggestion of the chief ministers’ report which is under study by this working group states that an active intervention of state governments by retailing essential commodities at prices below prevailing market prices is needed to bridge the gap. The report has cited the case of Delhi government which in February 2010 intervened directly by supplying select essential commodities at lower rates through retail outlets. Besides, marketing opportunities for farmers need to be improved by minimising the cost of intermediation in the supply chain by using co-operatives and encouraging initiatives of national spot exchanges. One of the suggestions is an urgent need to remove the legal hurdles in creating barrier-free national market through electronic portals.
For marketing of perishable fruits and vegetables , it is suggested to have terminal market complex ( TMC) by private entrepreneurs with all infrastructural facilities like storage, cold storage, transportation, electronic auction . The floor subsidy will be 25 per cent of project cost with a ceiling of subsidy of 40 per cent up to Rs 50 crore per TMC.