Home / News / India /  Govt okays amendment to Essential Commodities Act

NEW DELHI : The Union cabinet headed by Prime Minister Narendra Modi on Wednesday gave its approval to amend the Essential Commodities Act (ECA). The more than six-decade-old law that empowers the government to impose curbs on stocking of farm produce will now be amended to help farmers get better value for their produce and help attract fresh investments into the beleaguered farm sector. It will also lead to removal of cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities.

This amendment comes against the backdrop of the government reaching out to financially weaker sections including farmers amid growing criticism that the lockdown, while necessary to control the spread of covid-19, was unplanned. This has forced a large number of migrant workers to head back to their villages from the cities.

“Today’s cabinet decisions will have a very positive impact on rural India, especially our industrious farmers," Modi said in a tweet and added, “Long-pending agrarian reforms will enable the transformation of the sector."

The government, on its part, is hopeful that an above normal monsoon and an increase in crop prices will potentially lift farm incomes. A boost to the agriculture sector is crucial to double farm incomes by 2022, a stated goal of the Centre.

Amending the ECA of 1955 is among the measures finance minister Nirmala Sitharaman announced last month as part of the 20 trillion stimulus package.

“While India has become surplus in most agri-commodities, farmers have been unable to get better prices due to lack of investment in cold storage, warehouses, processing and export as the entrepreneurial spirit gets dampened due to hanging sword of ECA," the government said in a statement.

Although agricultural products can be regulated in emergency situations such as war, famine or extraordinary price rise; any participant in the value chain and exports will remain exempted. “This will remove fears of private investors of excessive regulatory interference in their business operations," the statement said.

Addressing reporters, agriculture and farmers welfare minister Narendra Singh Tomar said the landmark decisions will benefit farmers and transform the agriculture sector.

The decisions also reflect the government’s strategy to use the virus crisis to initiate reforms, a case in point being the reforming of the agricultural produce market committees (APMCs).

In the first meeting of the cabinet after the NDA government completed its first year in office in its second term, the cabinet on Monday approved an increase in the Minimum Support Prices (MSPs) for 14 crops that are 50-83% higher than the cost of cultivation in an effort to put more money in the hands of farmers. Also, an interest subvention scheme for farmers has been extended by another three months to 31 August.

Farm focus has been an import part of the NDA’ lexicon and was evident in the first decision of its second term, when it extended the scope of the Pradhan Mantri Kisan Samman Nidhi, or PM-Kisan scheme, to include all the 145 million farmers across the country. It also announced a 3,000 monthly pension scheme for 125 million small and marginal farmers.

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