Cabinet Committee on Economic Affairs: Powers and Functions

Reading time: 8-10 minutes.

The pandemic COVID-19 has compelled the governments all around the world to keep on toes. Assessing the gravity of situation on daily basis, the Government of India has been taking various steps as mitigation measures.

Recently, in order to ensure the supply of essential goods during the period of lockdown, the government resorted to increase the monthly quota of subsidised food grains by 2 kg to all 80 Crore beneficiaries through Public Distribution Systems (PDS). Under the National Food Security Act (NFSA), the government was distributing 5kg per person already that has now been pegged at 7 kg.

Furthermore, the prices of staple grains have been zeroed to Rs. 2/Kg for wheat (against Rs. 27/Kg) and Rs.S 3/Kg for rice (against Rs. 32/Kg), a major step to provide relief to the poorest section of the population.

Those decisions were taken by Cabinet Committee on Economic Affairs (CCEA) under the leadership of Prime Minister Narendra Modi.

The supply is being distributed from the buffer stock of Food Corporation of India (FCI) that contains the food grains above the buffer stock norms. Buffer stock norms are the stipulated quantity that has to be at least maintained at the beginning of each quarter to ensure supply to PDS and other schemes of the government. These limits are set by CCEA. The Committee fixes the minimum buffer norms on quarterly basis: i.e. as on 1st April, 1st July, 1st October and 1st January of every financial year.

Significance of this development

A household keeps a stock of essential resources untouched in a storage capacity that can be accessible in the situation of an emergency. Similarly, a nation has the obligation to keep some resources aside that can be used at the time of any exigency. The Government of India has given the task of procuring buffer stock of essential commodities to National Agricultural Cooperative Marketing Federation of India Limited (NAFED), Food Corporation of India (FCI) and Small Farmers Agri-business Consortium (SFAC).

 On the outbreak of COVID-19, national lockdown was declared for 21 days which implied that the activities with regards to the production and supply of basic amenities can get ruptured.

Fortunately, the officials from FCI, state government agencies and NAFED have assured that there stays a huge stock of wheat, rice and pulses and that it will further ensure the supply and prices stable.

 FCI and government agencies have 30.97 million tonne rice, 27.5 million tonne wheat and un-milled paddy that stand at 28.70 million metric tons, as on March 1. NAFED currently has 2.5-2.8 million tonne of pulses- chana, tur, urad and moong and another 0.7 million tonne groundnut and mustard. It can be deduced from the figures that the current stock of wheat and rice is higher than the buffer and strategic norms. It was recorded that stocking norm of rice is 13.6 million tonnes while for wheat it is 7.5 million tonnes as on April 1.

Besides increasing the monthly quota of subsidised food grains by 2kg, CCEA has permitted the poor households who are beneficiaries of PDS, to lift the stock of 6 months in one go.

Considering the series of decisions taken by CCEA and other authorities, the question that intrigues is: why are such changes being brought? The primary reason is that there is really an enormous stock of over flowing buffer norms. As on July 1, 2019, grain stocks were almost 81 per cent above the buffer stock and strategic reserve norms. The last time India had more than 70 million tonnes of wheat and rice stocks in July was in 2013. However, it can be considered a boon in the context of present situation. Had this not been under our control, the picture would have been a dismal one.

At the same time, as echoed by FCI Chairman D.V. Prasad, India will have enough food grain stock to feed for the next one and a half year since the stock is being anticipated to bloom after the harvest season this year. It was estimated that the warehouses in India will be filled with 100 million tonnes by the end of April while the annual requirement under welfare schemes is of 50 million to 60 million tonnes. Moreover, it should not be ignored that the storage needs to be emptied for the Kharif crops of the upcoming season, as well.

Amid all this, it is important to discuss about CCEA that has taken the responsibility to ensure sufficient supply of essential commodities in order to obliterate any chances of putting the public in distress. As at present the whole governmental machinery has been working day and night to not to let any other problem rise so as to sabotage the very purpose of lockdown i.e. saving lives of Indians at whatever cost. Therefore, taking measures to provide the food supply to the last person belonging to the marginalised section of the society, becomes the aim of the government. Let no one die of Covid-19 or hunger. 

Salient features of CCEA

The subjects in India are managed by three organs of the government, namely- Legislature, Executive and Judiciary. India having federal features, divides its Executives into State and Union. The executive power of the Union finds its constitutionality from Article 53. Besides that, the Article vests the executive power in the hands of President of India. However, the work is not done by the President in-person but de-facto is done by the Prime Minister and its Council of Ministers. That does not infer that President is a redundant entity. Article 77(3) provides that to make the executive business efficient and convenient, the President is authorized to make the rules. Thus, in 1961, Government of India Transaction of Business Rules, 1961 came into existence for disposal of Government Business, inter-alia and it finds its constitutionality from the said Article.

The rules brought by then President Dr. Rajendra Prasad, specify everything about the Cabinet Committees. They mention about two sorts of committees- standing and ad-hoc. While, former is of permanent nature, latter is temporary. The rules enumerate various Cabinet Committees for different work areas  and  Cabinet Committee on Economic Affairs (CCEA) is one among them.

Constitutional validity

The CCEA is not a constitutional body. It does not find its genesis from the Constitution for there is no mention about it, there. Thus, CCEA is considered as extra-constitutional in nature.

Composition of the committee

The composition of the committee varies from time to time. As per TBR 1961, it can constitute members ranging from 3 to 8. However, the strength of the members entirely relies on the Appointments Committee of the Cabinet. In usual business, the members are from the Cabinet who constitute the committee. They add members from different ministries, apart from whom, non-cabinet members as ‘special invitees’ can be added, too.

The CCEA was reconstituted after the India’s General Elections in 2019. Presently, the members consist of-

  1. Prime Minister, Shri Narendra Modi who chairs the committee;
  2. Minister of Defence, Shri Rajnath Singh;
  3. Minister of Home Affairs, Shri Amit Shah;
  4. Minister of Road Transport and Highways; Minister of Micro, Small & Medium Enterprises, Shri Nitin Gadkari;
  5. Minister of Chemicals & Fertilizers, Shri DV Sadananda Gowda;
  6. Minister of Finance; Minister of Corporate Affairs, Smt. Nirmala Sitharaman;
  7. Minister of Agriculture &Farmer Welfare, Minister of Rural Development and Minister of Panchayati Raj, Shri Narendra Singh Tomar;
  8. Minister of Communications and Information Technology; and Minister of Law and Justice, Shri Ravi Shankar Prasad;
  9. Minister of Food Processing Industries, Smt. Harsimrat Kaur Badal;
  10. Minister of External Affairs, Dr. Subrahamanayam Jaishankar;
  11. Minister of Railways, Minister of Commerce &Industry, Shri Piyush Goyal;
  12. Minister of State (Independent Charge) of the Ministry of Petroleum and Natural Gas and Minister of Steel, Shri Dharmendra Pradhan.

Appointment

The members of not only CCEA but other Cabinet Committees are appointed by Appointments Committee of the Cabinet. At present, Prime Minister Narendra Modi and Minister of Home Affairs Amit Shah hold the positions.

Nature of work handled

The members in CCEA work on all the matters that come under the ambit of economic field. The mandate to formulate, analyse and review the activities concerned with economic policies stretches out in expansive way. The work ranges from as grass-rooted as rural level to foreign investments that require policy making at the highest level.

Aims and objectives

The sound rationale as to why committees like CCEA were made can be rooted back to why the Cabinet Committees were formed, in the first place. They are instrumental in reducing the workload over the cabinet. The Committees frame proposals for the Cabinet and make decisions that can certainly be reviewed by the Cabinet. Likewise, there are a number of factors that can amount to inefficiency in the working of cabinet members. For instance, differences in views, ineffective co-ordination between departments, just to name a few, can bring the machinery at halt. Thus, the Cabinet Committees comes to the rescue and balm the working of the business. Besides how the machinery works, they also guarantee qualitative policies. They provide an in-depth examination of the policies for departments since ministers from varied areas get to evaluate the same situation.

Therefore, it can be easily inferred that CCEA was made with an aim of reducing the workload from the departments dealing with economic policies. In addition to that, it is meant to smoothen the functioning and furthermore provide for an in-depth examination of policies.

Powers and responsibility

The CCEA is authorised to work in varied spaces in the field of economics. It keeps a check on prices of agricultural products. The activities related to small and marginal farmers that may give an impetus to the rural development, are looked upon by the said committee, too.

The domain concerned with industrial growth is within the competence of CCEA. In addition to that industrial licensing including licensing for establishment of Joint Sector Undertakings are also within the purview of CCEA.

The work does not end, here. It also evaluates the performance of Public Sector Undertakings (PSU) that may include their structural and functional restructuring. As known, if a PSU underperforms, the task of disinvestment including strategic sale and pricing of PSU, are taken up by none other than, CCEA (except to the extent entrusted to an Empowered Group of Ministers). It is important to note that the CCEA also priorities public sector investment and considers only specific proposals for investment, the limit of which is revised from time to time.

The price behaviour, decisions on supply and exports and imports, inter alia, of essential goods are scrutinised by the committee. The price for distributing essential goods in Public Distribution Systems is monitored by CCEA, as well.

Lastly, review of the factual reports from different Departments, Ministries and Agencies is considered in respect of the business allocated to the CCEA.

Conclusion

India, a big country ready to take a giant leap, to meet its aspiration of being one of the robust economies in the global arena, has been trying hard to emerge winner on home turf as well. In order to meet the basic needs of her vast population CCEA came into its existence within a short duration of time after India became an independent republic.

During the lockdown, it can be witnessed that CCEA not only takes care of purchase, procurement and storage of grain in large quantities, it also keeps a check on prices of the food grains. Secondly, it also puts agencies such as NAFED, FCI under observation and PDS also falls under its ambit.  Present scenario has compelled every Indian to appreciate the measures taken by CCEA i.e. to amass food grain in surplus quantities (in routine for years) which has come in good stead when a large population of poor people, has to be fed by the government, for they have no source of income or food due to Lockdown to combat Corona outbreak.

Newspapers and Electronic media is rampant with news about rotting grain for want of proper storage or poor sleeping without food due to no supply, but the relentless efforts by the workers and officials deserve appreciation for keeping the problem to a minimum in the present unprecedented scenario.

Author: Samriddhi Sanga from Vivekananda Institute of Professional Studies, Pitampura, New Delhi.

Editor: Tamanna Gupta from RGNUL, Patiala.

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