Essential commodities act salient features
Answers
Answered by
0
The ECA gives consumers protection against irrational spikes in prices of essential commodities. The Government has invoked the Act umpteen times to ensure adequate supplies. It cracks down on hoarders and black-marketeers of such commodities.
But there is another side to the story. Given that almost all crops are seasonal, ensuring round-the-clock supply requires adequate build-up of stocks during the season. So, it may not always be possible to differentiate between genuine stock build-up and speculative hoarding. Also, there can be genuine shortages triggered by weather-related disruptions in which case prices will move up. So, if prices are always monitored, farmers may have no incentive to farm.
With too-frequent stock limits, traders also may have no reason to invest in better storage infrastructure. Also, food processing industries need to maintain large stocks to run their operations smoothly. Stock limits curtail their operations. In such a situation, large scale private investments are unlikely to flow into food processing and cold storage facilities.
The Act, or the government, also seem to be ineffective in controlling rampant profiteering being indulged in by numerous companies in the name of "organic" or unprocessed foodstuffs. For example, it is unbelievable but true that unprocessed rice (a.k.a. brown rice) bears a price that is two to three times the price of milled or polished rice, though the trading companies make extra profit by selling the bran resulting from milling as well at a hefty price.
One also finds that foods labeled as 'organic' are sold at astronomical prices in most parts of the country, though in a few places like Pune these are available at prices that even the poor are able to afford. Unfortunately, despite such clear evidence of profiteering by companies at the cost of customers, the government seems either unwilling or unable to stop such malpractices under the Act.
But there is another side to the story. Given that almost all crops are seasonal, ensuring round-the-clock supply requires adequate build-up of stocks during the season. So, it may not always be possible to differentiate between genuine stock build-up and speculative hoarding. Also, there can be genuine shortages triggered by weather-related disruptions in which case prices will move up. So, if prices are always monitored, farmers may have no incentive to farm.
With too-frequent stock limits, traders also may have no reason to invest in better storage infrastructure. Also, food processing industries need to maintain large stocks to run their operations smoothly. Stock limits curtail their operations. In such a situation, large scale private investments are unlikely to flow into food processing and cold storage facilities.
The Act, or the government, also seem to be ineffective in controlling rampant profiteering being indulged in by numerous companies in the name of "organic" or unprocessed foodstuffs. For example, it is unbelievable but true that unprocessed rice (a.k.a. brown rice) bears a price that is two to three times the price of milled or polished rice, though the trading companies make extra profit by selling the bran resulting from milling as well at a hefty price.
One also finds that foods labeled as 'organic' are sold at astronomical prices in most parts of the country, though in a few places like Pune these are available at prices that even the poor are able to afford. Unfortunately, despite such clear evidence of profiteering by companies at the cost of customers, the government seems either unwilling or unable to stop such malpractices under the Act.
Similar questions