NEW DELHI: The Centre will amend the Essential Commodities Act to provide for notifying stock limits for a retailer or wholesaler only if retail prices increase abnormally—by 100% in case of perishable items like onion, potato and tomato and 50% in the case of non-perishable essential commodities.
The government will shortly bring in an ordinance to effect changes in the Act, sources said.
The EC Act is used by the government to put a cap on prices and specify stock limit for essential items. The government has worked out a formula for taking a decision to impose stock limit.
Sources said as per the formula, the current price of an essential commodity will be compared with the average price of the same item for past one year and past five years, whichever is lower. “If the prevailing retail price of a perishable item is more than double of the lowest average price, the stock limit norm can be imposed,” said a source.
Announcing the decision to amend the law, Finance minister Nirmala Sitharaman said stock limit can be imposed under very exceptional circumstances like national calamities, famine etc which lead to abnormal surge in prices.
She said after the amendment, agriculture food items including cereals, edible oils, oilseeds, pulses, onion and potato will be deregulated. Sitharaman said the changes will enable better price realisation for farmers and no stock limit will apply to processors or value chain participants, subject to their installed capacity or to any exporter, subject to the export demand.
The government has already lifted the stock limit norms for these entities. “This is done through notification as per the enabling provision of EC Act. But after the change in law there will no need for such notifications,” a source said.
Though there is a perception among traders that the law was more useful during the 1980s when hoarding was rampant and now it has lost significance, in recent years the government has successfully used the stock limit provision on several occasions to rein in artificial price rise of onion, tomato and pulses.
Sources said comprehensive amendments will be made in the Act later to eliminate punitive measures such as preventive detention, jail, confiscation of vehicles and attachment of properties of suspected hoarders and black marketers. The financial penalty would be increased by 10 times of the confiscated items.