FM announces amendment to Essential Commodities Act, farm market to be liberalised

Finance Minister Nirmala Sitharaman on Friday announced an amendment to the Essential Commodities Act, 1955, to ease export restrictions on farm goods and introduce legislation to liberalize production, marketing and sale of farm produce for both domestic and export markets.

Unveiling the third tranche of a massive stimulus package pledged by PM Modi to rescue the Indian economy from the devastating fallout of the Coronavirus pandemic, Nirmala Sitharaman announced 11 measures for the agriculture and allied activities which includes a Rs 1 lakh crore package for developing farm infrastructure and introduced measures to reform governance.

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Essential Commodities Act to be amended

Nirmala Sitharaman announced that the government will amend the Essential Commodities Act, 1955, to enable better price realization for farmers by attracting investments and making the farm sector competitive. Agriculture products including cereals, edible oils, oilseeds, pulses, onions, and potatoes will be de-regulated.

Stock limits on farm products will be imposed only in exceptional circumstances like natural calamities, famine, or a sudden spike in domestic prices. Likewise, no stock limit will be applicable to food processing and other value addition units subject to their installed capacity or to any exporter subject to their export market.

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New law to liberalize marketing of farm products

The government will bring in a Central law to implement agriculture marketing reforms to provide marketing choices to farmers and provide adequate choices to the farmer to sell produce at attractive prices, FM Sitharaman said. She noted that farmers are currently forced to sell their produce only to licenses in APMCs (Agriculture Produce Market Committees) which constrains their ability to get good price.

The law, likely to be introduced n the monsoon session of Parliament for approval, will ease barriers of inter-state movement of farm goods and lay a framework of e-trade of the items.

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Legal framework for price and quality

Furthermore, to provide assurance to farmers on Agriculture Produce Price and Quality, a facilitative legal framework will be created to enable farmers for engaging with processors, aggregators, large retailers, exporters, etc. in fair and transparent manner, Finance Minister announced. Risk mitigation for farmers, assured returns, and quality standardization will form part of this framework.

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