Onion, potato come under Essential Commodities Act

Exports curbed to check price rise

The Centre on Wednesday decided to enforce a stock holding limit on onions and potatoes by bringing the two staples under the Essential Commodities Act (ECA).

The step is expected to check hoarding that leads to artificial price rise in the domestic market. It also increased the minimum export price of the two vegetables to $500 per tonne to check their outbound movement. The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi decided to bring onions and potatoes under the purview of  Essential Commodities Act, 1955 for one year.

The step imposed an upper limit on the stocks of the two vegetables held by traders and farmers. It also empowers the state governments to undertake de-hoarding operations and control the price of onions and potatoes.

The measure was taken after tough action by the government for nearly two weeks failed to check rising prices of the two vegetables.

“Despite adequate availability, there has been an increase in prices of onions and potatoes. There have been complaints of hoarding”, Law and Telecom minister Ravi Shankar Prasad said after a meeting of the CCEA.

“We want to assure all citizens that our government is committed to reduce prices” he said, adding a notification to bring onions and potatoes under ECA will be issued on Thursday. New Delhi, Madhya Pradesh, West Bengal, Mizoram and Tripura had requested the Centre for such a measure so as to differentiate between a trader and a stockist before taking any action against hoarding.

The decision on the stock holding limit will, however, be left to each state government to notify, Prasad said.

Onions and potatoes were removed from the purview of the ECA in 2004 after remaining under its ambit for years.

Earlier in the day, the government increased the Minimum Export Price (MEP) for onions to $500 per tonne from earlier $300 per tonne. MEP is the rate below which no exports are allowed.

Only a fortnight ago, the MEP on onions was re-introduced at $300 per tonne. Retail prices of onion have risen to about Rs 25-30 a kg, while the wholesale prices are ruling at Rs 18.50 a kg in the national capital.

The CCEA also decided to release 5 million tonnes of additional rice to BPL and APL families through public distribution system in states where the food security law is not in force. The additional rice, which will be over and above the normal PDS allocation, will be released from July to March 2015.

“We have sufficient supply. There is no need to panic. We are taking all possible measures to improve supply and control prices," Prasad said, adding that the government was hopeful that the monsoon rain would improve from next week.

* Encourages equitable distribution and availability at fair price of the scarce item listed under the Act

* Checks unethical trade practices like hoarding and black marketing

* Empowers government to control production, supply and distribution of commodities under the Act

* States can facilitate distribution of commodities and fix their prices but are under centre’s supervision

* Commodities such as foodgrain, edible oils, pulses, kerosene, sugar are essential commodities