The finance ministry on Friday announced an amendment in the Essential Commodities Act to deregulate prices for foodstuff including cereals, edible oils, oilseeds, pulses, onions, and potatoes. Nirmala Sitharaman said the move was aimed for better price realisation for farmers and to attract investments in the sector.
The amendment essentially means that the prices of the above staple agricultural produce will now be governed by the market forces. Sitharaman said that government intervention will only be done in emergency situations like a dramatic price hike or any crisis.
Under the act, the government directs agencies for maintenance of stock limits of essentials so that prices of these commodities can be regulated, but that is all set to change.
“Stock limit to be imposed under very very exceptional circumstances like national calamities, famine with surge in prices,” a finance ministry presentation said on Friday.
It added that ‘no such stock limit shall apply to processors or value chain participant, subject to their installed capacity or to any exporter subject to the export demand.”
The government reasoned that the EC Act was enacted in the days of scarcity and deregulation was meant to attract better prices, investment and to make farm sector competitive.
The above announcement is in keeping with Prime Minister Narendra Modi’s promise to bring in broad and sweeping agriculture reforms to transform the farm sector and unlock its true economic potential with special emphasis on strengthening the supply chain.
In addition to the amendment to the Essentials Commodity Act, the finance minister unleashed an eight-point-reform programme aimed to boost the self-sufficient India vision under the Rs 20,000 crore Atma Nirbhar Bharat special economic package, being announced in the wake of the disaster unleashed by coronavirus pandemic.