Essential Commodities Act Amendment May Boost Farmers' Income, But Increase Rural Poverty: Experts

The amendments to the Essential Commodities Act (ECA) is a right step as it will boost farmers' income but it may also lead to increase in rural poverty and have an adverse impact on the public distribution system, a leading economist said here on Wednesday. Parliament passed the Essential Commodities(Amendment) Bill, 2020, which seeks to remove cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities.

The bill, which replaces an ordinance promulgated in June, is aimed at eliminating fears of private investors of excessive regulatory interference in their business operations. "The relaxation on ECA will increase farmers' income as they will be able to sale their produce anywhere, and not just to the local mandi. Now, large corporates will go deep into villages to buy crops directly. It will be remunerative for farmers," the economist said.

But it may also have two major adverse impacts if prices of essential produce jump at the farm level due to bulk procurement by large players or hoarders, said the economist who refused to be named as the subject has become a major political issue. "First, inflation in rural areas will rise resulting in more poverty. Secondly, the government procurement cost for PDS is expected to rise," he said.

A farmer in Hooghly district said that he is not aware of the details of the farm bills, but if he can sell his produce anywhere and large corporate buyers are allowed, there is a possibility of getting better price. However, Forum of Traders Organisations, a body of traders, said that amendment to the Act will allow big businessmen to hoard essential commodities such as cereals, pulses, edible oil, onion and potato leading to rise in prices.

"Within a day after the passage of the bill, onion prices have jumped by Rs 10 a kg. Potato prices also rose (in West Bengal) as new central rules in June allow its barrier-free trade. The product is being sent to other states and the state government cannot control it," the Forum's secretary Rabindranath Kole claimed. West Bengal Cold Storage Association president Tarun Kanti Ghosh said that they are studying the impact of the ECA amendments on cold storage though it does not directly relate to them.