The Standing Committee on Food, Consumer Affairs and Public Distribution (2020-21) studied ‘Price Rise of Essential Commodities – Causes & Effects’ recently and submitted a report. In the report, the committee called on the government among other things to mitigate the price rise & revise taxes on petrol & diesel. The Standing Committee on Food, Consumer Affairs and Public Distribution (2020-21) selected the subject ‘Price Rise of Essential Commodities – Causes & Effects’ for examination and report. Accordingly, the Committee took briefing and oral evidence of the representatives of the Department of Consumer Affairs in December 2020. Essential commodities are vital and very essential in a way that they must reach everybody at affordable prices. To ensure adequate availability of all the essential commodities to the economically weaker families/people of the country at a fair price, under Article 246, entry no. 33 of the Concurrent List of Seventh Schedule (of the Constitution of India), the Parliament passed the Essential Commodities Act, 1955. There is no specific definition of essential commodities in the Essential Commodities Act, 1955 (EC Act), but Section 2(A) of the Act states that an “essential commodity” means a commodity specified in the “Schedule” of this Act. The Act gives powers to the Central Government if it is satisfied that it is necessary to do so in the public interest, to notify an item as essential, in consultation with the State Governments. The Government enacted The Essential Commodities (Amendment) Act, 2020 in September 2020, which allows the central government to regulate the supply of certain food items only under extraordinary circumstances (such as war and famine). Stock limits may be imposed on agricultural produce only if there is a steep price rise. List of Essential Commodities The list of commodities included in the Schedule of Essential Commodities under the Essential Commodities Act (EC Act), 1955, are; With respect to new additions to the above list, the committee enquired whether there are plans to include more items including Fast Moving Consumer Goods (FMCGs) which directly impact the welfare or health of consumers, viz. packaged foods, beverages, toiletries, over-the-counter drugs, and other consumables. The Department of Consumer Affairs stated that no such plans are under consideration at present. Price rise of Essential Commodities. As per the Ministry of Consumer Affairs, the causes of price rise of essential commodities include factors such as: Increase in cost of cultivation: Increase in cost of cultivation for inputs like fertilizers, wages, etc. influences the prices of food articles. Lack of technological breakthrough: The technological breakthrough for enhancing the productivity of pulses, oilseeds, and cereals in India has not advanced sufficiently. These are not the favoured crops due to high risk and fluctuations in production, giving rise to supply-side constraints. Infrastructure and logistics constraints as factors for price rise: There is wastage of crops due to lack of awareness about proper storage, improper handling during their transportation, lack of awareness about proper methods of storage, etc. These factors are significant in influencing the prices of highly perishable items like fruits and vegetables. Also, an increase in fuel prices directly impacts transportation costs which add to the wholesale and retail prices of food products. The Department of Consumer Affairs stated in a written note that because of the inherently perishable nature of the produce and short shelf life, around 30% of vegetables in the country perish during harvest, storage, grading, transport, packing and distribution. Further, there is wastage of vegetables along the supply chain due to poor post-harvest management and lack of cold chain and seasonality of vegetable production creates fluctuations in prices. Adverse weather conditions and dependence on Monsoon: The Ministry also stated that with a limited area under irrigation, crops have become susceptible to the vagaries of Monsoon and adverse weather conditions like drought. The Indian farmers are dependent on the four-month Monsoon season during which 80% of the year’s total rainfall is received. Apart from these general factors, the Ministry stated that hoarding by the traders is also a factor contributing to the price rise of essential commodities like pulses and onion. In other words, several factors like a demand-supply mismatch, including due to adverse weather/rainfall induces shortages in the food supply, rising international prices, multiple tiers in the value-chain, increase in the cost of production, structural changes in demand patterns, etc. are factors affecting food inflation.