The issue came up for discussion at the first meeting of the cabinet committee of economic reforms held last week. Finance minister Yashwant Sinha is likely to announce the intention of the government to amend the Essential Commodities Act of 1955 in his next Budget speech.
The Act, according to sources, will be amended in such a way so as to restrict the powers of the states to control both the movement and storage of foodgrain. The move aims at freeing the farm sector which is plagued by a number of inhibiting controls and regulations.
The Essential Commodities Act, it may be mentioned, provides for control of production, supply and distribution of certain commodities identified as essential commodities under the Act to protect the interest of consumers. Several states have issued a large number of control orders under the existing legislation inhibiting free movement of certain food and agricultural produce.
Mr Sinha, in his last Budget speech had said, in the changed present situation undue restrictions on movement and stocking of foodgrain and agricultural produce is acting as a disincentive to farmers.
Apart from freeing the inter-state movement of foodgrain and farm produce and removing curbs on storage and stocking of such commodities, the government also wanted to bring down the number of commodities that could be declared as essential under the Act.
The food ministry is reviewing the Essential Commodities Act in consultation with the states.
As part of the agriculture sector initiatives, the government is also looking at introducing a policy of competitive procurement of
This, however, would involve ending monopoly purchases by government agencies and hiring of private agencies for food procurement. It was suggested at the CCER meeting that the Food Corporation godowns with staff may be transferred to the states. No final view on the subject, however, was taken at the meeting.