Monday, December 21, 2020

Agitation and the three Acts passed in 2020 Part -1.

An agitation is going on against the three bills passed by the parliament by the due process and approved by the Hon’ble President of India. The group agitating against these Acts consists of not just a section of farmers from Punjab but also several other groups. I do not wish to name them here. Suffice to say that these are well identified and most of them have been agitating against the NDA Govt from time to time. The agitators have gathered in a large number around Delhi trying to lay siege to stop the Govt from functioning and to disrupt life of people in Delhi.

The democratic process that we have collectively adopted, provides for dissent to be expressed. Therefore, the rights of the protesters and dissenters are to be defended, protected and respected. While recognizing the rights of the dissenters we also need to protect and defend the rights of those who support these Acts and think that these will usher in a new era of prosperity and help raise financial position of the farmers. Certainly, it is the duty of the Govt to respect the right of both these groups and we are sure that the Govt will do it.

While protecting the rights of these two groups, the Govt must also give a clear signal that the democratic process cannot be subverted by a group of 10-20 lakh people disrupting normal like and holding the rest of the countrymen to ransom. If such a signal is not given, it may mean that any group which can mobilize such a gathering (10-20 lakh) shall run the Govt and the aspirations of the masses conveyed through their elected representatives will be stifled.

In the following paragraphs it is proposed to examine the contents of these Acts. The three Acts are as under:

  • Amendment in the Essential Commodities Act 1955.
  • Farmers - The Farmers (Empowerment and Protection) Agreement in Price Assurance and Farm Services Act, 2020
  • Farmers -The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act 2020.

Let us take these up and discuss them.  

Amendment in the Essential Commodities Act 1955

Before we start discussing amendments in this Essential Commodities Act 1955, let me mention that the other relevant Act dealing with the Essential Commodities is ‘The Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980’ and that no amendment has been made in it. Therefore, there should not be any fear of any dilution in the powers of the Govt in dealing with ‘Black-marketing and maintaining supplies of the essential commodities’.

The amendment has been made in the ‘Essential Commodities Act 1955’ by adding (i) ‘sub-section (1A) is added in Section 3’ and by adding (ii) masks (2ply & 3ply surgical masks, N95 masks) & hand sanitizers to the list of essential items given in the schedule of the Act.

Amendment of Section 3

In the Section 3 a Sub-section ‘(1A)’ added after sub-section ‘(1)’. Let me quote the sub-section (1A) which has added in Section 3 through the amendment

Quote

Notwithstanding anything contained in sub-section (1),-

(a) the supply of such foodstuffs, including cereals, pulses, potato, onions, edible oilseeds and oils, as the Central Government may, by notification in the Official Gazette, specify, may be regulated only under extraordinary circumstances which may include war, famine, extraordinary price rise and natural calamity of grave nature;

(b) any action on imposing stock limit shall be based on price rise and an order for regulating stock limit of any agricultural produce may be issued under this Act only if there is-

(i) hundred per cent. increase in the retail price of horticultural produce; or

(ii) fifty per cent. increase in the retail price of non-perishable agricultural foodstuffs.  over the price prevailing immediately preceding twelve months, or average retail price of last five years, whichever is lower:

Provided that such order for regulating stock limit shall not apply to a processor or value chain participant of any agricultural produce, if the stock limit of such person does not exceed the overall ceiling of installed capacity of processing, or the demand for export in case of an exporter:

Provided further that nothing contained in this sub-section shall apply to any order, relating to the Public Distribution System or the Targeted Public Distribution System, made by the Government under this Act or under any other law for the time being in force.

Explanation.-The expression “value chain participant”, in relating to any agricultural product, means and includes a set of participants, from production of any agricultural produce in the field to final consumption, involving processing, packaging, storage, transport and distribution, where at each stage value is added to the product.]

Unquote

The sub-section 1A.a states that prices of the notified commodities may be regulated only under extra-ordinary circumstances like war, famine, Natural Calamities and extraordinary price rise etc. I suppose there is nothing to quarrel on this clause.

The sub-section 1A.b states that stock limits to be imposed only if the prices rise above specified limits (100% for horticultural and above 50% for non-perishable agricultural foodstuffs) when compared to lower of the two prices (1) prevailing immediately preceding twelve months & (2) average retail prices of last five years. The Public Distribution System or the Targeted Public Distribution System have been kept out of this provision. Therefore, any fear on account of likely hoarding of commodities, their non-availability on this account and exceptional increase in prices are rather ill founded.

Further the industries in food processing business and the other participants of the value chain (as clarified in the explanation at the end of the sub-clause) are permitted to stock up to their installed capacities. Those familiar with Investment appraisals exercise (calculation of Return on Investment and Sensitivity Analysis) would vouch that this is least that can be done to reduce risk of non-availability of raw materials for the industry.

Amendment of items in the list of Essential Commodities listed in the Schedule of the Act.

The amendment made in the schedule is quoted below:

Quote

(8) masks (2ply & 3ply surgical masks, N95 masks) & hand sanitizers.

Unquote

The list had 7 items and ‘masks and sanitizers’ have been added to the list. Looking to fact that during the current pandemic these have become an essential part cannot be denied and therefore I suppose there is nothing to quarrel on this account.

The sub-clause uses ‘only if’ conditions which are ‘necessary’ conditions. Students of ‘Logic’ will agree that people often find the ‘necessary’ conditions a bit difficult to appreciate. Once explained, I am certain all will agree that there is nothing in the amendment to agitate about. Therefore, I am certain anyone reading the amendment clause by clause will not find any cause to quarrel on account of the amendment in the Essential Commodities Act 1955.