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The Essential Commodities (Amendment) Ordinance, 2020

The Essential Commodities (Amendment) Ordinance, 2020

We have never thought of a year with such a serious and fast spreading virus which will lead to economic crises along with many other problems. Countries around the world is facing similar problem due to Covid-19 and this has left people of all the fields with empty hands. So India took a step to solve problem of people and farmers and Implemented  Essential Commodities (Amendment) Act (ECA)

Implementation of the Governments the Proposed Market Reforms through Ordinance

The Union Cabinet approved three major decisions via central ordinances on June 3, 2020, that impact India’s agricultural sector, and on June 5, 2020, the Ministry of Law and Justice published the three ordinances following approval from India’s President, Ram Nath Kovind. Although the ordinances came into immediate effect on June 5, 2020, they still need to be presented in Parliament for debate and final approval, which is expected to take place in the next four to six months. The three ordinances follow:

  1. The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020

This ordinance will create an environment where farmers and traders will have the ability of free choice of sale and purchase of agricultural products as per the GOI (Gross Operating Income). It will also eliminate barriers to inter- and intra-state trade and commerce outside physical market premises, which are normally regulated by state government Agricultural Produce Market Committees (APMCs). The ordinance aims to create additional trading opportunities outside established APMC market yards to help farmers get more competitive prices due to additional competition

  1. The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020

The GOI’s press release states that this ordinance will empower farmers to engage with processors, wholesalers, aggregators, wholesalers, large retailers, and exporters on a level playing field without any fear of exploitation. It will transfer the risk of market unpredictability from the farmer to the sponsor and also enable the farmer to access modern technology and better inputs. It will reduce the cost of marketing and improve farmer incomes.

  1. The Essential Commodities (Amendment) Ordinance 2020

In this ordinance, basic food items including cereals, pulses, oilseeds, edible oils, onions, and potatoes will be removed from the list of essential commodities, which will help address private investors’ concerns of excessive regulatory interference in their business operations. The ordinance specifies that these commodities can only be regulated through stock limits under situations such as war, famine, extraordinary price fluctuations, or natural calamities.

Above all the three ordinances will allow Indian farmers to remove previously state-imposed market intermediaries and directly sell their agricultural productions (mostly perishable produce) to a much larger pool of buyers, including out-of-state markets. Potential new private sector actors have also been liberated and, as such, have an incentive to invest in warehousing, cold-storage facilities, and other market improvements.

The Act empowers the central government to control the production, supply, distribution, trade, and commerce in Essential Commodities.

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