Stock limits
Topic: Agricultural Marketing, MSP, Buffer Stocks and PDS · NCERT: Beyond NCERT
Meaning
Stock limits are government caps on how much of a commodity a trader may hold at one time. The aim is to stop hoarding, which means holding back goods to push prices up. Stock limits are imposed under the Essential Commodities Act 1955. They are a tool for controlling food prices from the consumer side.
Example
In recent years, stock limits have been placed on wheat, pulses and edible oils. The Essential Commodities (Amendment) Act 2020 allowed stock limits only in extraordinary price rises: a 100% rise for horticulture produce, or 50% for non-perishables. That restriction ended when the Act was repealed with the other farm laws in 2021.
Don't confuse with
- Buffer stock norms: these set the minimum grain the government itself must hold in the central pool. Stock limits set the maximum a private trader may hold.