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Onion, Potatoes, Pulses etc Are No Longer Essential Commodities – Know What This Means

essential commodities

The Parliament in this monsoon session has passed the Essential Commodities (Amendment) Bill 2020. In simpler terms, let us examine the impact of the bill, what it wants to achieve, and who all will benefit from this amendment.

So, what does this amendment basically do?

This amendment removes commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities.

There must be a reason for putting them in essential commodities. Will this amendment adversely affect then?

It was right to treat these commodities as essential at some stage when India was struggling to produce them in ample quantity. Consumers needed to be protected against hoarders at that time. But now, India has surplus production of most of the agri-commodities. Retaining them in the essential commodities list neither helps farmers nor the consumers.

Even then, taking these commodities out of the list may result in shortage sometimes. Will the law do nothing hereon?

Such worries are also addressed in the bill. While liberalizing the regulatory environment, the bill ensured that interests of consumers are safeguarded. In situations such as war, famine, extraordinary price rise and natural calamity, such agricultural foodstuff can be regulated. However, the installed capacity of a value chain participant and the export demand of an exporter will remain exempted from such stock limit imposition to ensure that investments in agriculture are not discouraged.

Who will benefit from this amendment?

The amendment will pave the way for opening up new avenue for farmers and agriculture-related business.

Now, private players will invest in warehouse and storage facilities for these produce that have come out of essential commodities tag. When they were considered as essential commodities, private players were under constant fear of excessive regulatory interference in their business operations. Now, they are assured of the freedom to produce, hold, move, distribute and supply. This will lead to harnessing of economies of scale and attract private sector/foreign direct investment into agriculture sector.

Are there any benefits to farmers and consumers?

As stated earlier, India’s problem today is not about less production in agriculture but the wastage of surplus agriculture produce due to underdevelopment of storages and supply chain. Now, the amendment will encourage private players to invest in storages, thereby strengthening the overall supply chain mechanism of the agriculture sector. Preventing wastage will help both farmers and the consumers with fair price.

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