Amid price rise, Vijay knocks on Centre’s door to curb hoarding, black markets

Tamil Nadu has asked the Union Ministry of Consumer Affairs, Food and Public Distribution to approve stockholding limits on rice, pulses, edible oils, and onions. The state says these restrictions are needed to keep essential commodities available at reasonable prices. It is seeking approval because no such limits are currently in force for the specified commodities.

The proposal sets different ceilings for different market participants. Rice wholesalers could hold 2,000 tonnes, while retailers could hold eight tonnes. Rice millers could keep no more than one month’s production capacity. Other limits include 200 tonnes for tur and urad dal wholesalers and 25 tonnes for onion wholesalers.

Tamil Nadu points to higher retail prices as part of its case. In September, rice cost Rs 61.66 per kilogram in the state, compared with Rs 46.20 nationally. The government says global factors, El Niño-related crop failures, hoarding, and black marketing could worsen price pressure.

Stockholding limits restrict how much of a commodity traders and other market participants can keep in stock. Their purpose is to prevent businesses from accumulating unusually large supplies, which can contribute to hoarding, black marketing, and higher prices. The Centre generally imposes such limits under Section 3 of the Essential Commodities Act, 1955.

Tamil Nadu’s proposal uses different ceilings for each group. Rice wholesalers could hold 2,000 tonnes, and retailers eight tonnes. Millers could hold no more than the equivalent of one month’s production capacity. For tur and urad dal, the proposed ceilings are 200 tonnes for wholesalers and five tonnes for retailers.

The proposal also covers edible oils and vanaspati, with limits of 500 quintals for wholesalers and 30 quintals for retailers. Onion wholesalers would face a 25-tonne limit, while retailers could hold two tonnes. These limits are proposed, not currently in force.

September prices were higher in Tamil Nadu for each commodity listed. Rice cost Rs 61.66 per kilogram in Tamil Nadu, against Rs 46.20 nationally. That was Rs 15.46 more per kilogram, or 33 percent higher. It was the largest percentage difference among the four products.

Tur dal cost Rs 134.23 per kilogram in Tamil Nadu, compared with Rs 124.41 across India. The difference was Rs 9.82 per kilogram, or 8 percent. Onions cost Rs 59.28 per kilogram versus the national average of Rs 52.96. That gap was Rs 6.32, or 12 percent.

Palm oil was priced at Rs 160.28 per litre in Tamil Nadu, against Rs 150.91 nationally. It was therefore Rs 9.37 more per litre, or 6 percent higher. The data came from the Department of Consumer Affairs’ price portal and used state-reported figures.

Tamil Nadu needs the Centre’s approval because the proposed restrictions are being sought under the Essential Commodities Act, 1955. The article states that the Centre generally imposes stockholding limits under Section 3 of that law. The state has therefore written to the Union Ministry of Consumer Affairs, Food and Public Distribution for concurrence.

The request concerns commodities for which no stockholding limits are currently in force, according to the state’s proposal. Tamil Nadu wants the Centre to authorise limits covering wholesalers, retailers, and millers. These limits would control how much rice, pulses, edible oils, and onions could be stored.

The state has supported its request with price data and earlier central orders. It says prices in Tamil Nadu were above all-India averages during April-September of the current financial year. It also cites previous Centre-imposed limits on wheat, pulses, and edible oils as precedents for the proposed action.

If wholesalers and millers hold unusually large stocks, less of a commodity may be available for normal market sales. That can make it harder for consumers and smaller retailers to obtain supplies. When availability tightens, sellers may raise prices, especially if buyers fear that supplies will become even scarcer.

Tamil Nadu says global factors and crop failures linked to El Niño could encourage wholesalers and millers to retain large stocks. Such stockpiling can become hoarding when supplies are held back rather than released through regular trade. The state also warns that this could lead to black marketing, where commodities are sold through improper channels or at inflated prices.

The result could be stronger inflationary pressure and weaker consumer purchasing power. The government says stockholding limits would help keep essential commodities available at reasonable prices. The proposed ceilings are intended to restrict excessive accumulation, although the article does not report their eventual effect because the Centre’s approval is still being sought.

Tamil Nadu has proposed limits similar to restrictions the Centre imposed in earlier years. It cites those orders as precedents, arguing that earlier central action provides a model for controlling stocks when prices or supplies become a concern. The proposed state limits would apply to rice, pulses, edible oils, and onions.

For rice, Tamil Nadu refers to the Centre’s wheat stockholding order of January 16. That order applied across states but remained in force only until March 31. For tur and urad dal, the state cites the July 2024 order covering tur and chana, which lasted until September 2024.

For edible oils, Tamil Nadu refers to the Centre’s March 30, 2022 order. It set limits from April 1 through December 31, 2022. The provided article ends before identifying the earlier onion precedent, so it does not establish which Centre order Tamil Nadu cited for onions.

Food prices can rise when supply falls or becomes uncertain. Tamil Nadu cited global factors and crop failure due to El Niño as conditions that could reduce available supplies. With fewer commodities moving through the market, buyers compete for what remains. That creates upward pressure on prices.

Hoarding can intensify the squeeze. Wholesalers and millers may hold large stocks instead of releasing them through normal trade. This reduces visible availability and can encourage black marketing. If consumers still need the commodities, demand remains strong relative to the reduced supply. Sellers may then charge more, adding to inflationary pressure.

The article gives September examples from Tamil Nadu. Rice cost Rs 61.66 per kilogram, compared with Rs 46.20 nationally. Tur dal, onions, and palm oil were also costlier in the state. Tamil Nadu wants stockholding limits to discourage excessive accumulation and help keep supplies available at reasonable prices.