The Hindu Business Line : Cap on wheat, pulses stock

In a bid to curtail spiralling prices of wheat and pulses, the Union Government has allowed the State Governments to enforce restrictions on stock limits, licensing requirements and movement of these two commodities.

The restoration of the powers of States to clamp these restrictions under the Essential Commodities Act, 1955 (ECA) — which was taken away through a Central Order issued by the previous National Democratic Alliance (NDA) regime on February 15, 2002 — is valid for a period of six months.

States will, thus, be allowed to unilaterally issue their own orders fixing storage limits and other restrictions as part of de-hoarding operations in these two commodities.

At the same time, import of wheat and pulses and also inter-State movement of these items will be kept outside the purview of any controls. However, the Centre or States "may direct such importers to declare receipts of stocks of these commodities and stocks retained by them", an official release said here on Friday. A Central Order to this effect is under issue, it added.

Order extended

The Centre had, on August 21, got a Bill passed by Parliament amending the ECA to empower it to declare any item as an `essential commodity' for a period of six months. This, in effect, nullified the February 15, 2002 Central Order doing away with licensing of dealers and providing them full freedom to "buy, stock, sell, transport, distribute, dispose, acquire, use or consume any quantity of wheat, paddy/rice, coarse grains, sugar, edible oil seeds and edible oils".

Subsequently, the scope of the Order — stripping States of the powers to unilaterally impose licensing, storage or movement restrictions — was extended to pulses, vanaspati, gur and wheat products.

The decision now to declare wheat and pulses as `essential commodities' for a period of six months was taken at a meeting of the Union Cabinet on Thursday.

It comes "following representations from a few States for restoration of powers under the ECA for undertaking de-hoarding operations in view of the assumption that there is speculative holding back of stocks, particularly of wheat, in anticipation of further rise in prices", the release stated.

Spiralling prices

Since the start of this year, prices of wheat and pulses have spiralled. This is notwithstanding the Centre's move to reduce customs duty on imports from 50 per cent to five per cent for the former and from 10 per cent to nil for the latter.

Over and above this, the Centre has also contracted wheat imports of 39 lakh tonnes at nil duty for the public distribution system through State Trading Corporation.