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Foodstuffs Market Regulation
Despite several objections, the three farm laws, including the Essential Commodities (Amendment) Act, 2020, were enacted with full force by the union government. However, after more than a year of the farmers’ agitation, the government decided to withdraw these laws. The amended ECA had some contradictory provisions and, in sum, limited the scope for regulation by local/state/union governments. The present article discusses the provisions of the amended ECA and its impact on the scope for regulation of the foodstuffs market.
The author is grateful to Twinkle, Ashutosh, Avinash, and Santosh for their comments on the draft of this article.
Food price inflation is a politically sensitive matter and has caused problems for governments in the past as well. There have been many recent instances, especially during the COVID-19 pandemic, when the food price inflation recorded a sharp increase. One may claim that the international price rise is among the factors of high food inflation, particularly for the products in which import is a significant share of the domestic availability (Shankhdhar 2021). However, one cannot deny that hoarding is also one of the contributing factors to price rise (Stiff et al 1975). It should be noted that hoarding is associated with the tendency among profit-seekers to control the larger supply segment of the value system that forces the consumers to pay an inflated price.
In many recent instances, the district, state and union government authorities had stepped in to prevent hoarding and the resultant price rise with the help of the Essential Commodities Act, 1955 before its amendment in 2020 (Hindustan Times 2020). In all the cases, the hoarders were selling essential commodities at rates higher than the market price or maximum retail price, keeping in mind the maximum profit share. The Supreme Court, through an interim order, had stayed the implementation of “farm laws,” including the Essential Commodities (Amendment) Act, 2020 (ECA 2020 henceforth) in January 2021.1 Later, on 19 November, the Prime Minister announced the government’s decision to repeal these acts (PIB 2021).
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