Draft Report of the High Level Group on Services Sector

7.2.7d Essential Commodities Act, 1955
The Essential Commodities Act, 1955 was enacted to ensure the easy availability of essential commodities to consumers and to protect them from exploitation by unscrupulous traders. Under the Act various State Governments had issued orders for licensing of dealers/retailers, regulation of stock limits, restricting the movement of food grains, compulsory purchase by the Government under the system of levy and placing restrictions on the entertainment of guests. In 2001 a Committee comprising of Central Ministers and a number of Chief Ministers took the view that while the Essential Commodities Act could continue as an umbrella legislation a progressive dismantling of controls and restrictions was in the best interests of farmers, consumers and traders. Accordingly all restrictions including licensing requirement, stock limits and movement restrictions were dispensed with by the Central Government through the Removal of (Licensing requirements, Stock limits and Movement restrictions) on Specified Foodstuffs Order, 2002 under the Essential Commodities Act, 1955 on 15.2.2002. Dealers were allowed to freely buy, stock, sell, transport, sell, transport, distribute, dispose etc. any quantity in respect of wheat, paddy/rice, coarse grains, sugar, edible oilseeds and edible oils without requiring any license or permit therefore under any order issued under the Act.
In August 2006 the Central Government issued an order whereby controls were reintroduced temporarily for a period of six months in respect of wheat and pulses. This order has been extended periodically and is at present valid until 31^st August 2008.
The High Level Group is of the view that the reimposition of controls on these products has not had any favourable effect on the price or availability of these commodities and has only added to costs of dealing with them at the retail level. The Group therefore recommends that the especial dispensation in respect of wheat and pulses should be allowed to lapse with effect from 31^st August 2008.