🧵 Essential Commodity Act - 2020 (amendment) | A thread in simple language answering most of the questions.

please RT!
1/ what is ECA?

it is an act to identify any commodity as "essential". once this is done, central govt can control its production, distribution and supply.

it can also impose a limit on its stock. most recent addition to the list were - masks, hand sanitizer (march'20)
2/ why was it created?

well, there are several things in our country like petroleum products, drugs etc. that we largely import and they shouldn't be less in supply.

the act was created back in 1955.
3/ what are the changes in ammendment?

ammendment removes cereals, pulses, edible oils, oil seeds, onion and potatoes from essential commodity.

so now, government will not excercise control over their production, distribution and supply.

no limits on hoarding as well.
4/ why the government is doing so?

well, back in 1955 our production was too low and we had to import these to feed our population.

now, we produce much more (even export these):

wheat: 10M tonnes to 100M tonnes
Rice: 25M tonnes to 110M tonnes
Pulses: 10M tonnes to 25M tonnes
4/ why the government is doing so? [cont..]

the problem is, since we have limit on stocking. no private player invests in logistics and infrastructure for their storage.

25-30% of perishable eatable waste each year due to lack of cold storage. same is the case with grains.
4/ why the government is doing so? [cont..]

not having enough infrastructure to store, our exports also take a major toll.

government wants to change this by inviting investment in storage infrastructure.

thats why storage limit had to go for things we produce enough.
5/ can't this hoarding increase prices?

yes. there is a provision for that.

these commodities can be added back to essential list and their storage limit can be put back if we face any big scale shorate, have a war, have a calamity, or a famine hits us.
6/ what about normal price rise?

well, if prices of perishable goods rise by 100% in 12 month or from average price of last 5 years (whichever is lower)

if prices of non-perishable goods rise by 50% in a month or from average price of last 5 years (whichever is lower)
6/ what about normal price rise? [cont...]

in both these cases, these things will be added back in essential commodities and limit on storage will be put back.

in such situations, people hoarding these things will be forced to sell them and prices will be controlled.
7/ how will it impact farmer?

in current scenario, govt can control quantity of storage and its price without any discussion.

govt has extreme powers, traders face the brunt and that snowballs to the farmers, whose income gets impacted
8/ should opposition oppose this amendment?

well, here is what congress promised in its manifesto just a year ago -

1. A policy to enable construction of modern warehouses, cold storage and food processing facilities in every block of the country
8/ should opposition oppose this amendment? [contd...]

2. Replacing the ECA, 1955, by an enabling law that can be invoked only in the case of emergencies.

now you tell me, should they oppose when their own promises are being fulfilled by the current govt?
9/ final verdict?

these amendments were brought in June and reading all the expert commentary even from people who do not easily praise govt (i.e. Yogendra Yadav, Shekhar Gupta etc.), reveals that this draconian law that needed immediate reform.

Good job from the govt. 👏🇮🇳
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