Essential Commodities (Amendment) Bill 2020 | UPSC

Essential Commodities (Amendment) Bill 2020 | UPSC


Parliament passes the Essential Commodities (Amendment) Bill, 2020

      WHY IN NEWS:

This bill will create a positive environment not only for farmers but also for consumers and investors: Shri Danve Raosaheb Dadarao

MINISTRY? :-Ministry of Consumer Affairs, Food & Public Distribution


For PRELIMS note the definition , inclusions and exclusions of the essential commodities list.

For MAINS it is very important to keep an eye on the background and the new changes made . This can be part of your Mains 2020 exam . Let us dive in !


The bill was passed by Lok Sabha on 15th September, 2020.



  • Legislation will help in more investment in cold storages, modernization of food supply chain and bringing price stability.

This will create competitive market environment and prevent wastage of agri-produce.

  • The Essential Commodities (Amendment) Bill 2020 has provisions to remove commodities like cereals, pulses, etc. from the list of essential commodities.


  • The EC (Amendment) Bill 2020 aims to remove fears of private investors of excessive regulatory interference in their business operations.

The freedom to produce, hold, move, distribute and supply will lead to harnessing of economies of scale. 

  • This will also attract private sector/foreign direct investment into agriculture sector.


  • It will help drive up investment in cold storages and modernization of food supply chain.
  • The Government, while liberalizing will also ensure 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.
  • This will ensure that investments in agriculture are not discouraged.
  • This amendment will also help to achieve the government’s promise to double the farmer’s income.


  • While India has become surplus in most Agri-commodities, farmers have been unable to get better prices.
  • The reasons include the lack of investment in cold storage, warehouses and processing.
  • The export as the entrepreneurial spirit gets dampened due to Essential Commodities Act.

Farmers suffer huge losses when there are bumper harvests, especially of perishable commodities.

  • The legislation will help drive up investment in cold storages and modernization of food supply chain.
  • It will help both farmers and consumers while bringing in price stability.
  • It will create competitive market environment and also prevent wastage of agri-produce that happens due to lack of storage facilities.


  •  The Essential Commodities Act, 1955 empowers the central government to designate certain commodities (such as food items, fertilizers) as essential commodities.

The central government may regulate or prohibit the production, supply, distribution, trade, and commerce of such essential commodities. 

  •  The Ordinance provides that the central government may regulate the supply of certain food items too .
  • It including cereals, pulses, potatoes, onions, edible oilseeds, and oils, only under extraordinary circumstances.


(i) War

(ii) Famine

(iii) Extraordinary price rise and

(iv) Natural calamity of grave nature.


The Ordinance requires that imposition of any stock limit on agricultural produce must be based on price rise.

  • A stock limit may be imposed only if there is:

(i) a 100% increase in retail price of horticultural produce; and

(ii) a 50% increase in the retail price of non-perishable agricultural food items.

  • The increase will be calculated over the price prevailing immediately preceding twelve months.
  • The other way is – Average retail price of the last five years, whichever is lower.

      IASbhai WINDUP: 

  • This amendment is required to prevent wastage of agri-produce due to lack of storage facilities.
  • This amendment will create a positive environment not only for farmers but also for consumers and investors .
     SOURCES:THE HINDU & PIB | Essential Commodities (Amendment) Bill 2020 | UPSC


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