Essential Commodities Act Current Affairs - 2020

Union Cabinet approves farmer friendly Essential Commodities Act

On June 3, 2020, the Union Cabinet chaired by PM Modi has made historic amendments to Essential Commodities Act. Under the amendment, the regulatory environment has been liberalized for farmers.

The Farmers Agreement on Price Assurance and Farm Services Ordinance, 2020:

The amendment has been made through this ordinance. The ordinance will allow farmers to engage with aggregators, processors, exporters and large retailers as well. Under the amendment to Essential Commodities Act, 1955, the agricultural commodities such as pulses, cereals, onions oil seeds and potatoes have been deregulated.

Also, the amendment will allow clamping of stock limits only under very extreme circumstances. This includes famines and natural calamities. The stock limit is not applicable to processors and value chain participants. They shall stock only to their installed capacity. This will help in better price realization.


The Finance Minister Nirmala Sitaraman had earlier announced under Atma Nirbhar Bharat Abhiyan that a central law would be formulated that will not bind farmers to sell their crops. The minister also announced that the law will not bind the farmers to sell their produce only to licensed traders in the Agricultural Produce Market Committee mandis.

Third Tranche of Rs 20 lakh Economic Package announced

With the PM Modi announcing the Atma Nirmar Bharat Abhiyan on May 12, 2020, Rs 20 lakh crore were allocated to ease life of the people during Lock Down 4.0. Following this, the Finance Minister Nirmala Sitaraman held two press meets earlier explaining the country about the split of these funds.

The third Tranche of the funds are to be allocated to agriculture and allied activities. This includes 11 measures. Among these 8 are related to strengthening infrastructure, building better logistics. The rest of the three are on governance and administrative reforms.

Infrastructure and Capacity Building

  • Around Rs 1 lakh crore is being allocated to Farmer Producer Organization and cooperative societies. This includes cold chains, post-harvest management infrastructure, storage centres, etc. This mainly targets the startups and entrepreneurs that reach the produce to the markets.
  • Rs 10,000 crores has been allocated to Micro Food Enterprises. A scheme is to be launched under which the funds will be used to support local produce highlighting. It is to be noted that PM Modi had mentioned “Vocal for Local” during his speech in Atma Nirar Bharat Abhiyan.
    • This will work on cluster based approach. Under the initiative, Kashmir can focus on Saffron, Bihar on Makhana, Tamil Nadu on Tapioca, Karnataka on Ragi, Andhra Pradesh on Chillies, North East on Bamboo and so on. Also, additional focus is to be provided on SC, STs and women.
  • Pradhan Mantri Matsya Sampada Yojana
    • The scheme was announced during Union Budget 2020-21. Rs 20,000 crore has been allocated to aquaculture and marine related fisheries operations. This will also help India doubling its fisheries export.
  • Rs 13,000 crores has been allocated to National Animal Disease Control Programme
  • Rs 15,000 crores has been allocated to Animal Husbandry Infrastructure Development Fund. This will support private investments in dairy.
  • Rs 4,000 crores has been allocated to promote the cultivation of herbs and medicinal plants.
  • Rs 500 crores has been allocated for bee keeping initiatives. This will benefit 2 lakh bee keeping farmers. Wax is currently being imported in India for industrial purposes. Boosting the bee keeping sector will help to reduce wax imports.
  • The Operation Greens (TOP) scheme that focuses on Tomatoes, Onion and Potatoes has been extended to all fruits and vegetables.

Governance and Administrative Reforms

  • Essential Commodities Act
    • The act is to be amended. The food stuffs such as cereals, oilseeds, edible oils, pulses, potato and onions are to be deregulated.
  • Marketing choices are to be provided to the farmers. A central law is to be constituted to make sure farmers do not have barriers such as inter-state trade within the country.
  • Quality Assurance and Agriculture Produce Price are to be provided before the sowing season begins. A legal framework will be brought in to achieve this. Large retailers, exporters, food processors will be included in the process.

Lock Down in India and GoI steps

India is the largest milk producer, largest pulse producers and also largest jute producer. It is also the second largest in the production of sugarcane, fruits, vegetables, cotton, groundnuts and fisheries. India is the third largest producer of cereals.

The following were the Government supports provided during the lock down. This includes the steps taken during the months of March and April.

  • During Lock Down, the GoI had purchased Rs 74,300 crore worth food grains from the farmers through Minimum Support Price system
  • Through PM KISAN Card Scheme, Rs 6,400 crores were transferred
  • GoI also cleared Rs 6,400 crores of claimed payments under PM Fasal Bima Yojana.
  • During Lock Down, demand of milk reduced by 20-25%. In order help milk producing farmers, GoI announced a new scheme of interest subvention of 2% on their loans. This scheme is to unlock Rs 5,000 crores in the hands of the milk producing farmers.
  • Operation of Marine Capture Fisheries and Aquaculture was released to support Inland Fisheries. Around 242 new registrations of shrimp hatcheries were done during the lock down.