Relaxation of stock limits on pulses: A step in the interests of big traders and hoarders

The central government issued a notification on 2nd July 2021, imposing stock holding limits on all pulses, except moong, for wholesalers, retailers, millers and importers. As per the order, stock limits were prescribed until 31st October for all states and Union Territories. Stock limits of 200 tonne and 5 tonne were imposed on wholesale traders and retailers respectively. Dal millers could stock 25% of their annual installed capacity or the previous three months of production, whichever was higher.

This stock limit was imposed later than it should have, given that oil and dal prices had shot up 120%-160%, in April-June 2021, over the previous year. Both, the wholesale and retail traders made good money while the producers did not and the working population had to cut back on their dal consumption because they could not afford such monstrous prices.

The government had to make out that it was taking some steps to address the issue of rising dal and oil prices.  On the one hand, it stepped up on imports and then in early July, it imposed these stock limits to show that it was doing something to curb hoarding. Traders’ associations immediately protested against the stock limit, which would constrain their profit making. Across Maharashtra, Madhya Pradesh and Rajasthan, traders pulled their shutters down. Several mandis were shut and several market committees, like in Maharashtra, stopped purchase and sale of commodities.

The Federation of Association of Traders Maharashtra (FATM) and the Chamber of Associations of Maharashtra Industry and Trade (CAMIT) Mumbai jointly organised a virtual meeting of trade representatives. A decision was taken to observe a one-day token bandh on 16th July against the Centre’s decision. The biggest trading associations in the country – the India Pulses and Grains Association (IPGA) and Confederation of All India Traders (CAIT) announced the threat of an indefinite bandh if the government did not recall the order on stock limits.

By 19th July, the government had relaxed the order and increased the permissible stock quantity of pulses allowed for wholesalers and millers with a complete exemption for importers. Clearly, the government had fulfilled the demands of the biggest traders of oil and pulses. Under the revised stock limit, wholesalers can now keep 500 metric tonnes (MT) of pulses at a time provided the quantity of any one pulse does not exceed 200 MT.

The Department of Consumer Affairs of the GoI has made some placating remarks to the public that stock limits will be monitored. But the fact is that the interests of traders and hoarders have been served at the expense of the working population. Traders ensure that the stocking policy is in their favour. At the same time, the government’s spokespersons claim that this relaxation of the stocking policy will assure the peasants of a good return and encourage them to sow more dal. The government’s claim that it acts in the interests of kisans or the working people who consume these essential goods is a big lie given that it passed the Essential Commodities (Amendment) Act 2020. The Act has been stayed by the Supreme Court by its order dated 12th January 2021 until further orders. If the Act had been in force, then despite the rise in prices, the private traders would have been able to pile up their stocks with impunity.

The 2020 Amendment removes restrictions on stocking of certain essential commodities. It provides that the central government can regulate the supply of food stuff only under extraordinary circumstances such as war, famine, exceptional price rise and grave natural calamities. It further specifies that stock limit can only be imposed if there is 50 per cent rise in retail price of non-perishable agricultural foodstuff over the price prevailing in the preceding 12 months or average retail price of last five years, whichever is lower. So up to a 49 per cent price rise would still give full scope to the trading businesses to make huge profits while the working people would be severely affected by such a price escalation. The Essential Commodities (Amendment) Act 2020 which is one of the three farm laws that were passed in 2020 clearly reflects whose interest is served in the present system. Likewise, the recent withdrawal of stock limits on food products is clearly against the interests of the working people and in the interest of private traders and hoarders.


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