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To check hoarding and creation of cartels leading to price distortion in the agriculture commodities market, there is a need to re-look at the Act governing the essential commodities and allow market forces to function, said Ramesh Chand, Member, NITI Aayog.
“You need to liberalise the agriculture markets. Unless you do that, these kinds of things will keep happening and happen more frequently. Along with APMC Act we need to look at the Essential Commodities Act. Is it serving the right purpose or is it causing an adverse effect?,” he said.
An agriculture expert and full-time member of NITI Aayog, Chand told BusinessLine : “Today, whenever price increases abnormally due to excessive volatility, we only blame black marketing and hoarding. Only to some extent it would be due to black marketing and hoarding. It is time we looked at the Essential Commodities Act.”
“I am not taking any position, but time has come to take an assessment on the role of Essential Commodities Act. Is this Act enabling us to check black marketing and hoarding and therefore put a check on price spike or is it preventing investment in storage and large import by private sector, which can also play a role in moderation of prices and price stability? It is complicated…,” he said.
Besides, the private sector should also play a role in this segment, he said, adding that “it can help in stabilisation. We need to learn from experience of other countries on why hoarding and black marketing is not happening there. If say we remove restrictions on stock and remove this Essential Commodities Act, then what kind of market will be there? Obviously the big players will enter the market.”
The private sector knows before the government if prices are about to increase, he said pointing out that “Then those people would want to import from the international market. But now we can’t import more than 500 tonnes or 700 tonnes — whatever the restriction on stock holding is. So, I feel that the private sector has an important role in price moderation and price stabilisation.”
Stressing that competition is healthy, he said, “Right now there are hundreds and thousands of players, but if you open the market there will be say 10 players. Monitoring those 10 is easier. You can set some guidelines on how they should release their stock.”
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