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A STUDY ON ESSENTIAL COMMODITIES AMENDMENT (ORDINANCE), 2020

Updated: Jul 29

[Authored by Sakshi Ajit Kale, a final year law student at ILS Law College, Pune.]


The Union Cabinet approved the amendment to the Essential Commodities Act,1955 to deregulate food items, including cereals, pulses and onion. In addition, the Cabinet approved 'The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020'. The government also approved 'The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020.' [1]


WHAT IS ESSENTIAL COMMODITIES ACT, 1955?

The Act was enacted in the interest of general public to ensure availability of essential commodities to consumers. The objective of the said Act is to provide for the control of the production , supply and distribution of, and trade and commerce in, certain mentioned commodities herein after the essential commodities with the intervention of the government. The Act also deal with imposing penalty against a person illegally dealing in an essential commodity. Section 2-A states that ‘essential commodity’ means a commodity specified in the Schedule. [2] The essential commodities listed in the Schedule are[3] - (1) drugs. Explanation .—For the purposes of this Schedule, drugs” has the meaning assigned to it in clause (b) of section 3 of the Drugs and Cosmetics Act, 1940 (23 of 1940); (2) fertilizer, whether inorganic, organic or mixed; (3) foodstuffs, including edible oilseeds and oils; (4) hank yarn made wholly from cotton; (5) petroleum and petroleum products; (6) raw jute and jute textiles; (7) (i) seeds of food-crops and seeds of fruits and vegetables; (ii) seeds of cattle fodder; and (iii) jute seeds; (iv) cotton seed. The Act gives powers to the central government to add or remove a commodity in the "Schedule." The Centre, if it is satisfied that it is necessary to do so in public interest, can notify an item as essential, in consultation with state Governments. The latest items added to this schedule are face masks and hand sanitisers, which were declared essential commodities in the wake of COVID-19 outbreak.


Further , the Ministry of Consumer Affairs, Food and Public Distribution said that the ordinance has introduced a new subsection (1A) in Section 3 of The Essential Commodities Act, 1955.The amended law provides a mechanism for the regulation” of agricultural foodstuffs, namely cereals, pulses, oilseeds, edible oils, potato, and supplies under extraordinary circumstances, which include extraordinary price rise, war, famine, and natural calamity of a severe nature.

The new inserted sub section 3(1A) states that- Section 3 (1A)- Notwithstanding anything contained in the sub-section(1), - If the supply of such food stuffs , Including cereals, pulses, potatoes, onions, edible oilseeds and oils, as the Central Government may , by notification in the Official Gazette , specify, may be regulated only under the extraordinary circumstances which may include war, famine, extraordinary price rise and natural calamity of grave nature.

Any action on imposing stock limit shall be based on price rise and order for regulating stock limit of any agricultural produce maybe issues under this act only if there is - (i) Hundred percent increase in the retail price of horticultural produce; or (ii) 50% increase in the retail price of non-perishable agricultural food stuffs, Over the price prevailing immediately preceding 12 months, or average retail price of last five years, which ever is lower :


Provided that such order for regulating stock limit shall not apply to a processor or value chain participant of any agricultural produce, if the stock limit of such person does not exceed the overall ceiling of installed capacity of processing, or the demand for export in case of an exporter : Provided further that nothing contained in this sub section shall apply to any order , relating to the Public Distribution System or the Targeted Public Distribution System, made by the Government under this Act or under any other law for the time being in force.[4]

What is the impact of the amendment to Section 3 of the Act?

The amendments will remove commodities such as cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of regulated essential commodities. The government with the help of the EC Act ,controls the production, distribution and supply of agricultural products. In light of the signed amendment the central government would control the production supply and distribution of the agricultural produce only in the given extraordinary circumstances like war, famine, extraordinary increase in price and natural calamity of grave nature, and not otherwise.

The Farmers Produce Trade and Commerce (promotion and facilitation (Ordinance), 2020 [5] will facilitate barrier free interstate trade and commerce of farmers’ produce outside the physical premises of markets or deemed markets notified under various state agricultural produce market legislation and will also provide for framework of electronics trading and matters connected.

The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020 [6] will protect and empower farmers to engage with agricultural business firms, processors, wholesalers, exporters or large retailers for farm services and sell or future farming produces at mutually agreed remunerative price framework in a fair and transparent manner and format is connected there with. Under the said ordinance the farmer and the engaging business party will be bound by the agreement made in regard to purchasing of the agricultural produce with the given consideration in the agreement and so on. This will assure protection of farmers from any mischief committed by the engaging business party.


As a result of the amendment to Section 3 of the EC Act, the government has shaked off its duty of providing minimum support price , that should be given to the produce mentioned in section 3(1A) and even if the other two ordinances which provide for free trade and commerce and protection of farmer with regard to the assured price agreement , there is no protection or promise given to the farmers regarding their minimum support price(MSP). It is being urged by the farmers at all level that there should be implementation recommendation made by the MS Swaminanth Commission[7] on increase in MSP by 50%.it can thus undoubtedly be said that the Amendment to the section and the bringing of two ordinances is quite gratifying the corporate sector and is less in favor of the farmers, especially the small scale farmers.

Also due to this amendment , the validity of various other Acts enacted by the central government under the authority given under section 3 such as the vegetable oil (Products) Regulation Order, 1988 ; the sugarcane(control) order, 1966 ; etc, is at stake.

Furthermore, the Essential Commodities Act,1955 is enlisted under the Ninth Schedule [8] of the Constitution of India. As known , the said schedule is out of the preview of judicial review. Thus, currently 284 such laws are shielded from judicial review. The Schedule became a part of the Constitution in 1951, when the document was amended for the first time. However the Ninth Schedule, finds itself under debate after the Supreme Court judgment on January 11, 2007, struck down land reform laws. The Apex court of the country in - I.R. Coelho (Dead) By Lrs vs State Of Tamil Nadu & Ors on 11 January, 2007 [9] held that the laws mentioned under the Ninth Schedule are open to judicial scrutiny and may be struck down if such laws violate the basic structure of the Constitution of India.

Thus, considering the landmark Keshavananda Bharati judgment, the laws inserted after April 24, 1973 , the day on which the said landmark judgement was delivered , the Supreme Court has held that it can strike down any law which is included in the Ninth Schedule, if, in its opinion, the law violates the basic structure of the Constitution.

Hence, in cases where this amendment affects the fundamental right of livelihood of farmers all over the country in various ways, whether they will be able to seek judicial remedy is questionable.

[1]http://timesofindia.indiatimes.com/articleshow/76177339.cmsutm_source=contentofinterest&utm_ medium=text&utm_campaign=cppst. [2] The Essentials Commodies Act, 1951, ACT NO. 10 OF 1955.

[3] Id.

[4] The Essential Commodities (Amendment) Ordinance,2020

[5] The Farmer's Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020.

[6] The Farmers' Empowerment and Protection Agreement on Price Assurance on Price Assurance and Farm Services Ordinace, 2020 No.11 of 2020.

[7] The National Commission on Farmers (NCF) was constituted on November 18, 2004 under the chairmanship of Professor M.S. Swaminathan. The Commission submitted five reports through the period December 2004 - October 2006.

[8] Entry 33 , Schedule Nine (Constitution of India).

[9] I.R. Coelho (Dead) By Lrs v. State of Tamil Nadu & Ors., AIR 2007 SC 861.

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