Essential Commodities Act may change

New Delhi, May 30 | Updated: May 31 2007, 05:30am hrs
The Centre is considering a proposal to do away with the provisions of the Essential Commodities Act, 1955 (ECA), to integrate the national agricultural market, reduce multiplicity of taxes and levies imposed by states and increase private investment in the market.

Government sources said the entire country would be treated as a single, homogenous market for all practical purposes. For this policy to come through, provisions under the ECA, such as levy, controls on movement, transportation, storage, processing and marketing would be done away with.

The changes aimed at curbing various market imperfections that cause distortion in the smooth flow of commodities, sources said. The purpose of regulating agricultural markets was to protect farmers from exploitation by intermediaries and traders and also to ensure better prices and timely payment for their produce. However, over a period of time these markets acquired the status of restrictive and monopolistic markets, providing no help in direct and free marketing, organised retailing, smooth raw material supplies to agro-processing, competitive trading, information exchange and adoption of innovative marketing systems and technologies, sources said.

The issue of multiplicity of taxes and levies imposed by states on the movement of goods within the the country has hampered the national integration of the agricultural markets.

Often the farmers have to bring their produce to the market yard. Exporters, processors and retail chain operators cannot get the desired quality and quantity of produce for their businesses, owing to restrictions on direct farming, they said.

Under the APMC Act, only state governments are permitted to set up markets. Monopolistic practices and modalities of state-controlled markets have prevented private investment in the sector. A task force on Agricultural Marketing Reforms set up by the ministry estimated an investment of Rs 12,230 crore for infrastructure development of the agricultural market, such an investment could only come from private participation, sources said.