Govt imposes stock limits on tur, urad dal to check hoarding

Subject :Polity

Section: Legislation in news

Context:

The central government imposed stock limits on tur (arhar) and urad till October 31, a move aimed at controlling the rising prices.

Stock limits:

The stock limit applicable to each of the pulses individually will be 200 metric tonnes for wholesalers and 5 MT for retailers.
An order to this effect has been issued by the Ministry of Consumer Affairs, Food and Public Distribution.
To prevent hoarding and unscrupulous speculation and also to improve affordability to the consumers in respect of tur dal and urad dal, the government has issued an order where it has imposed stock limits on the pulses applicable to wholesalers, retailers, big chain retailers, millers and importers.
Under this order… importers are not to hold imported stock beyond 30 days from the date of Customs clearance.
The respective legal entities are to declare the stock position on the portal of Department of Consumer Affairs and in case the stocks held by them are higher than the prescribed limit, they shall bring the same to the prescribed stock limits within 30 days of issuance of the notification.
The order has been issued in exercise of the powers conferred by the Essential Commodities Act, 1955

Essential Commodities Act:

There is no specific definition of essential commodities in The EC Act.
Section 2(A) of the act states that an “essential commodity” means a commodity specified in the “Schedule” of this Act.
The ECA was enacted way back in 1955.
It has since been used by the Government to regulate the production, supply and distribution of a whole host of commodities it declares ‘essential’ in order to make them available to consumers at fair prices.
The list of items under the Act include drugs, fertilizers, pulses and edible oils, and petroleum and petroleum products.
The Centre can include new commodities as and when the need arises, and take them off the list once the situation improves.
Under the Act, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.

How does it work?

If the Centre finds that a certain commodity is in short supply and its price is spiking, it can notify stock-holding limits on it for a specified period.
The States act on this notification to specify limits and take steps to ensure that these are adhered to.
Anybody trading or dealing in a commodity, be it wholesalers, retailers or even importers are prevented from stockpiling it beyond a certain quantity.
A State can, however, choose not to impose any restrictions. But once it does, traders have to immediately sell into the market any stocks held beyond the mandated quantity.