Consumer Affairs, Food & Public Distribution

The Department of Consumer Affairs under Ministry of Consumer Affairs, Food & Public Distribution (External website that opens in a new window)is responsible for the formulation of policies for Consumer Cooperatives, Monitoring Prices, and availability of essential commodities, Consumer Movement in the country and Controlling of statutory bodies like Bureau of Indian Standards (BIS) and Weights and Measures

General Overview

The Department of Consumer Affairs under Ministry of Food and Consumer Affairs, Food & Public Distribution is responsible for the formulation of policies for Monitoring Prices, availability of essential commodities, Consumer Movement in the country and Controlling of statutory bodies like Bureau of Indian Standards (BIS) and Weights and Measures. The Department is entrusted with the following works:

  • Internal Trade
  • Inter-State Trade: The Spirituous Preparations (Inter-State Trade and Commerce) Control Act, 1955 (39 of 1955).
  • Control of Futures Trading: the Forward Contracts (Regulations) Act, 1952 (74 of 1952).
  • The Essential Commodities Act, 1955 window) (10 of 1955) (Supply Prices, and Distribution of Essential Commodities not dealt with specifically by any other Ministry/Department).
  • Prevention of Black-marketing and Maintenance of Supply of Essential Commodities Act, 1980 (7 of 1980). Persons subjected to detention there under.
  • Regulation of Packaged Commodities.
  • Training in Legal Metrology.
  • Emblems and Names (Prevention of Improper Use) Act, 1952 (12 of 1952).
  • Standards of Weights and Measures. The Standards of Weights and Measures Act, 1976 (60 of 1976).
  • The Bureau of Indian Standards Act, 1986.
  • Consumer Cooperatives.
  • All attached or subordinate offices or other organizations concerned with any of the subject specified in this list including Forward Markets Commission, Mumbai.
  • Monitoring of Prices and Availability of essential commodities.
  • The Consumer Protection Act, 1986.
  • Consumer Welfare Fund. (CWF)

Now, we are going to look various departments individually and briefly

DEPARTMENT OF CONSUMER AFFAIRS

Todaythe Department has taken a number of steps to generate consumer awareness and to protect and promote consumer welfare. The plan allocation for consumer programme has been raised from Rs. 18.67 crore in 2004-05 to Rs. 107.94 crore in 2005-06 and Rs. 163 crore in 2006-07.

A National Consumer Helpline (NCH) was inaugurated at Delhi University on World Consumer Rights Day this year with financial assistance from the Department of Consumer Affairs. With a toll free telephone no. (1800-11-4000), this helpline provides guidance, information and advice to consumers for dealing with their day-to-day consumer related problems. Indian Institute of Public Administration (IIPA) has been appointed as a consultant to the Department of Consumer Affairs for three years in the area of consumer protection and consumer welfare.

A Consumer Online Research and Empowerment Centre (CORE) has been set up in collaboration with Consumer Coordination Council, a Federation of Voluntary Consumer Organisations in the country. The project provides scientific and effective system of collection and dissemination of consumer related information enabling consumers to seek quality goods and services. It also provides e-counselling and mediation for consumer complaints through its website, www.core.nic.in

Consumer Affair also includes following acts and Departments

The Consumer Protection Act, 1986 was enacted for better protection of the interests of consumers. All the provisions of the Act have come into force from 1 July 1987.

The Act was amended in 1991 and 1993. To make the Consumer Protection Act more functional and purposeful, a comprehensive amendment was carried out in December 2002 and brought into force from 15 March 2003. As a sequel, the Consumer Protection Rules, 1987 were also amended and notified on 5 March 2004. The salient features of the Act are

  1. It applies to all goods and services unless specifically exempted by the Central Government;
  2. It covers all the sectors whether private, public, and cooperative or any person. The provisions of the Act are compensatory as well as preventive and punitive in nature;
  3. It enshrines the following rights of consumers:
  1. Right to be protected against the marketing of goods and services which are hazardous to life and property;
  2. Right to be informed about the quality, quantity, potency, purity, standard and price of goods or services so as to protect the consumers against unfair trade practices;
  3. right to be assured, wherever possible, access to a variety of goods and services at competitive prices;
  4. Right to be heard and to be assured that consumers' interests will receive due consideration at the appropriate forum;
  5. Right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers;
  6. Right to consumer education;
  1. The Act also envisages establishment of Consumer Protection Councils at the central, state and district levels, whose main objectives will be to promote and protect the rights of consumers;
  2. To provide a simple, speedy and inexpensive redressal of consumer grievances, the Act envisages a three-tier quasi-judicial machinery at the national, state and district levels. These are: National Consumer Disputes Redressal Commission known as National Commission, State Consumer Disputes Redressal Commissions known as State Commissions and DistricteConsumer Disputes Redressal Forum known as District Forum;
  3. The provisions of this Act are in addition to and not in derogation of the provisions of any other law for the time being in force.

Indian Standards Institution (ISI) came into existence on 6 January 1947 as a registered society with the objective of harmonious development of activities of standardization, quality certification and marking. This set-up was provided statutory status through an Act of Parliament dated 26 November 1986.

Bureau of Indian Standards (BIS) came into existence as a national standards body of India on 1 April 1987 with a broadened scope and more powers, taking over the staff, assets, liabilities and functions of the ISI. The main functions of BIS include preparation and implementation of standards, operation of certification schemes both for products and systems, organization and management of testing laboratories, creating consumer awareness and maintaining close liaison with international standards' bodies.

Weights And Measures Department of Consumer Affairs has started a scheme of “Strengthening of Legal Metrology wing of the States and Union Territories in the country” at a cost of Rs. 24.72 crore for strengthening State enforcement machinery. Two bills for amending the Weights and Measures Act had been introduced in Rajya Sabha. The Bills contain many proposals to make the system more transparent, outsourcing of verification activities of the sophisticated Weights and Measures and for uniform enforcement across the country. Rules have been amended to incorporate new specification of Standard weights for testing higher capacity weighing machines, Sphygmomanometer (Blood Pressure measuring instruments) and CNG gas dispensers.

Department of Public Distribution

The department is charged with the prime responsibility of the management of the food economy of the country. The twin objectives of the Department are to ensure - Remunerate rates for our farmers and the supply of food grains at reasonable prices to the consumers through the public distribution system. The Department is concerned with the formulation of policies concerning the food grains sector - procurement, storage, movement and distribution. The Department implements the scheme of minimum support price to the producers of wheat, paddy and coarse grains and the distribution of food grains from the Central Pool. A close watch is kept on the stock and price levels of food grains and efforts are made to ensure their adequate availability at reasonable prices in different parts of the country.

Main activities

  • Formulation and implementation of national policies on procurement, movement, storage and distribution of wheat, rice and coarse grains.
  • Imports and export of wheat, rice and coarse grains.
  • Policy and planning for Targeted Public Distribution System (TPDS).
  • Buffer stocking policy and matters relating to food security.
  • Quality control of wheat, rice and coarse grains procured, stored and distributed by various public agencies in the country.
  • Storage facilities for the maintenance of central reserves of wheat, rice and coarse grains.
  • Research and dissemination of the techniques of scientific storage of wheat, rice and coarse grains.

Public distribution also includes following acts and Departments

Essential Commodities Act, 1955 was enacted to ensure easy availability of essential commodities to the consumers and to protect them from exploitation by unscrupulous traders. The Act provides for regulation and control of production, distribution and pricing of commodities, which are declared as essential for maintaining or increasing supplies or for securing their equitable distribution and availability at fair prices. Most of the powers under the Act have been delegated to the State Governments.

The list of commodities declared as “essential” is reviewed from time to time in the light of changes in the economic situation and particularly with regard to their production, demand, and supply. From 15 February 2002, the Government removed 11 classes of commodities in full and one in part from the list of essential commodities declared earlier. In order to accelerate economic growth and to benefit consumers, two more commodities have been deleted from the list from 31 March 2004. At present the list of essential commodities contains 16 items.

National Cooperative Consumers Federation of India Limited (NCCF) Thirty State Cooperative Consumers Organisations are affiliated to the NCCF. At the Central/Wholesale level, there are 800 Consumer Cooperative Stores. At the primary level, there are 25,759 primary stores. In the rural areas, there are about 44,418-village level Primary Agricultural Credit Societies and Marketing Societies undertaking the distribution of consumer goods along with their normal business. In the urban and semi-urban areas the consumer cooperative societies are operating about 37,226 retail outlets to meet the requirements of the consumers. The NCCF besides undertaking distribution of consumer articles, also has a Consultancy and Promotional Cell for strengthening consumer cooperative societies engaged in retailing.

DEPARTMENT OF FOOD

The Scheme of Antyodaya Anna Yojana (AAY) for supplying highly subsidised foodgrains to the poorest of the poor in the country has been expanded to cover 2.5 crore households in line with the National Common Minimum Programme (NCMP). With this, 38 per cent of the BPL section has been brought under AAY.

To ensure improved foodgrains availability of good quality and cater to local taste, State governments have been encouraged to take up procurement of foodgrains under the decentralised procurement scheme, and so far, ten States and UT have implemented the scheme comprising non-traditional States like Chhattisgarh, Gujarat, Karnataka, Kerala, Madhya Pradesh, Uttar Pradesh, Uttaranchal, Tamil NaduWest Bengal and Andaman & Nicobar Islands.

A Centrally Sponsored Scheme of Grain Banks is being implemented by the Department in tribal villages with the main objective of providing safeguard against starvation during natural calamity or lean season. The Grain Banks will be set up in food scarce areas like drought prone areas, the hot and cold desert areas, tribal and inaccessible hilly areas. A provision of Rs. 20.2 crore was made by the Planning Commission for the year 2005-06, for the establishment of 3,282 grain banks in the States of Andhra Pradesh, Orissa, Chhattisgarh, Madhya Pradesh, Jharkhand, Tripura and Meghalaya. In the current financial year Rs. 50 crore is provided for this purpose.

Impact OF GLOBALIZATION on Food, Consumer Affair and Public Distribution

Sector in India

The term globalization must be defined. That's the easy part. Globalization is defined as free cross-border flow of goods, services, capital, labor, information, ideas, and intellectual property. Everything in fact. Defined thus, globalization is more than mere trade reform. Over a period of time, globalization has increased importance in sector food, Public Distribution and Consumer affair because it brings international standard for quality, internationally accepted weighs and measures in the country in terms of consumer affair. As in case public distribution system is concerned it brings a backup for al goods and services which produced in low quantity through imports, and goods and services which are produced in excess can be exported as well to make a balanced and systematic Public distribution system. In terms of food through globalization it provides a variety of world class food.

Globalization has brought into India are the brand-names in consumer items like cold drinks, wafers, potato chips, breakfast cereals, tinned food and chocolates. These are the ‘priority' areas for multinationals like Coca Cola, Pepsi, Kellogg's, Nestle, Kentucky Fried Chicken (KFC) or MacDonald's or for that matter, the leading food Manufactures

Globalization has also brined the latest technology for production of food such as grains from Israel. The globalization has changed the view of India food industry by providing new kinds of food and eating habits such as Chinese food, Continental and etc.

As in concern with Distribution system it has provided new and techniques and methodology in terms of public distribution in India. TRANSPORT SYSTEM, Import and export for goods and services to maintain the proper distribution system to cater the require demand in India.

The Globalization of the Agrifood System

The globalization of the Agrifood system can be broadly defined as the integration of the production and processing of agriculture and food items across national borders through markets, standardizations, regulations, and technologies. The globalization of the Agrifood system increases:

  • Internationally traded foods increase as a proportion of production;
  • Traded agricultural inputs and transborder investments expand across countries;
  • the science, knowledge, and information contents of the agrifood system move across borders;
  • Standardization and related regulatory institutions increasingly move beyond individual countries;
  • The activities of nongovernmental and civil-society organizations involved in agriculture and
  • Food reaches across borders, shaping policy demands;
  • Consumers' tastesand the firms and structures attending to themshow growing similarities across countries and regions; and
  • The health and environmental externalities of Agrifood systems have transnational or global

Agrifood Globalization and the Poor

In discussing the effects of globalization on poverty and food security, it is important to keep sight of the reality of povertyit is a problem that affects people of different ages, genders, ethnic origins, and regionsfrom city slums to rural areas. Furthermore, poverty is not a static phenomenon. Populations affected by poverty are in a state of flux in many countries. One portion of the population may free itself from poverty, while others are newly affected or threatened by it.

Globalization and Consumer Affair

Today In the era of globalization the buyer is much smarter while buying the goods, buyer examines the goods before hand and most of the transactions are concluded by correspondence. Further on account of complex structure of the modern goods, it is only the producer/seller who can assure the quality of goods. With manufacturing activity becoming more organized, the producers/sellers are becoming more strong and organized whereas the buyers are still weak and unorganized. In the age of revolutionized information technology and with the emergence of e-commerce related innovations he consumers are further deprived to a great extent.

Impact OF Liberalization on Food, Consumer Affair and Public Distribution Sector in India.

Liberalizations refer to loosing control, removal of unnecessary controls and restriction and impede economic development.

Generally, India is considered as an agricultural country. There is a huge increment in the quantity of food grains after 1991. Govt. has played a major role by providing subsidies to framers and exempting various kinds of tax.

In recent years, trade in agriculture has not only attracted growing attention but is being viewed as the vehicle for global growth and equity. By expanding markets, by removing distortions from high levels of protection in agriculture, global trade will not only be facilitating competition but spur growth in an area that is linked directly to poverty and hunger.

The main goal of agricultural trade being to provide an enabling environment for a majority of the world's poorest to take advantage of the enormous opportunities to improve incomes and enjoy healthy lives. The link between trade liberalization in agriculture, and poverty alleviation, has to be seen from the impact it leaves behind on farming livelihoods, as well as on the national food sovereignty.

Statistical and economically significant effects on growth is no measure of resulting human development, it merely pushes people from the ambit of development discussions. A re-look at the implications of free trade in agriculture through the prism of human lives will probably reverse the trend

The WTO agreement on agriculture aimed at setting up rules in consonance with the national trade policies that would provide the much needed fillip to agricultural growth, thereby improving efficiency. These rules, essentially designed to provide a level-playing field, were in reality heavily tilted to protect the agricultural interests of the developed countries.

India adopted Structural Adjustment Policies (SAP) in 1991, on the recommendation of the IMF and World Bank. SAP entailed a set of policies to restructure different sectors of the economy, changes in trade, in the orientation of agriculture, changes in the role of the public and the private sector in the economy. It advocates liberalized trade, fiscal restructuring, increasing public sector ‘efficiency', financial sector reforms and specific programmes in agriculture, industry, transport and energy sectors. These programmes of structural adjustments affect both the availability of food at the national level and food security at the household level. It affects the food policy through;

  1. A shift in the strategy towards more export oriented economy, which leads to changes in the patterns of production in agricultural sector and hence the food production for the domestic economy gets affected. As a result, the self-sufficiency in production is relinquished in favour of exports.
  2. Devaluation and other macro economic changes affect the relative prices of food.
  3. Decline in public expenditure affects food subsidies and expenditure on agriculture through changes in input subsidies, public investment and so on.
  4. Increase in the incidence of poverty, inequality and unemployment are likely to affect real incomes and household food security.

Liberalization And Public Distribution System

One of the essential features of the SAP is the reduction in food subsidies as the proponents of SAP consider these subsidies to be wasteful expenditure. This is also related with the idea that the state should withdraw from major spheres of economic activity. Since 1991, the central government has been looking at means of reducing the food subsidy. One of the essential ingredients of such an attempt is a shift in the policy towards the PDS in India. The proponents of the SAP argue for TPDS so that the benefits of the public distribution reach the genuinely poor and the needy. There arose an anomaly. Food subsidy stood more or less at around 0.6 percent over the last twenty years. However, in nominal terms there has been a sudden increase in the food subsidy during 1990s especially after 1998 because of the mounting costs towards maintaining huge food stocks. On one hand the government raised the issue prices of items sold at fair price shops (Table-7) and on the other hand, a substantial section of the population were brought under the non targeted category (APL) who had to pay even more, for the commodities available through PDS. Issue prices were raised faster and more rapidly than procurement prices. As a result, the stock of food grains far exceeded the buffer norms. With the reduction in the purchasing power among the poor masses, the supply of food grains through PDS declined drastically from around 21 million tonnes in 1991 to around 13 million tonnes in 2001.

SWOT Analysis Of Food, Consumer Affair and Public Distribution in INDIA

Strengths

  • Diverse and rich resource base: India's strengths in the agro and processed foods sector include round-the year supply of raw material, trained and cheap manpower, largest milk production in the world, largest livestock population in the world, largest production of vegetables, second largest production of food and fruits in the world, and fifth largest production of eggs and sixth largest production of fish - a rich fare indeed.
  • Locational advantage: The strategic geographic location of being close to the Middle East and South-East Asian countries is beneficial to India in so far as these countries are important destinations for a number of Indian agro and processed food products.

Weaknesses

  • Low processing level: India's agricultural production base despite being quite strong, simultaneously involves wastages of agricultural produce. There is under utilization of processing capacity and value addition has been meagre to the extent of 7 per cent as against 45 per cent in the Philippines and 23 per cent in China.
  • Insufficient infrastructure: Food processing industry is facing constraints in terms of non-availability of adequate infrastructural facilities, like post-harvest storage facilities, cold chain systems, refrigerated transport and cabinets, etc. Consequently, most of the processing units are forced to either close down or operate at very low capacities during off-season. Apart from this, around 40 per cent of the food produce goes waste in its journey from the farmer to the food-processing unit. Inadequate quality control and testing infrastructure and shortage of regional training centres to encourage entrepreneurs are some of the lacunae prevalent in the Indian food-processing sector.
  • Obsolete Machinery: The requirements of food processing machinery are being met by chemical processing machinery manufacturers, specialised machinery manufacturers and small-scale units. Most of them do not have the necessary design and infrastructure for developing new products and cost-efficient machinery and equipment.
  • Inadequate credit supply and insufficient finances: Low margins in the industry make for the accessibility of seed capital and working capital difficult, in turn adversely affecting the growth rate of the industry.
  • Dominance of the unorganised and fragmented industry players: This has hampered the establishment of backward linkages among the farmers. Lack of integration among the producers and the processors has caused the mismatch between the quality and quantity requirements among them, resulting in huge wastages as well as a wider price spread of the processed food items. Maintenance of quality hygiene standards have also become difficult because of the unorganised market structure
  • Complicated and multiple laws and regulating authorities: Food standards are overlapping, contradictory and highly prescriptive, making regulatory compliance difficult. For example, there are 13 laws enforced by nine ministries. Multiplicity of different taxes, in addition to local taxes and levies charged on different food and beverages items, are a major hindrance in inter-state movement of food grains and items.
  • Miscellaneous factors: Inadequate marketing of these products in the domestic as well as in the international market has been affecting the demand for these products. Lack of skilled manpower, lack of process able varieties of farm produce, seasonality of some raw material, high inventory carrying cost, high packaging cost and low demand for processed foods on account of cultural preferences for home-made and fresh food are some of the other problems faced by the industry.

Opportunities

  • changing socio-cultural status: The robust economic growth has pushed the disposable incomes of the consumers, 45 per cent of which are spent on food items. In addition to this population growth is also playing a major role in triggering the demand with baby food items showing the great potential to grow at a faster pace The growing urbanisation, nuclear families, increasing number of working women, etc., are slowly influencing the consumption habits and patterns, shifting the consumer preferences in favour of ready-to-eat preparations, thus in turn accelerating the demand for these products and expanding the scope of the industry. Increasing number of NRI-supported families and NRIs themselves visiting the country apart from the increasing number of foreigners residing in the country, are also responsible for changing composition of the consumption basket to some extent, in turn providing impetus for the food processing industry
  • Rising exports from the industry: The food processing industry in India has a large export orientation. Though the industry has first begun its foray into the export market, there still exists tremendous scope, given its current 1 per cent share in the global processed foods market. The international markets, in fact, have started to look at India for more than its traditional product lines, such as spices and cashews. Though as yet symbolic, the Indo-US trade agreement signed o March 02, 2006 on the eve of President George Bush's visit to India is said to open opportunities for even Indian mangoes to be exported to the US.
  • Promotion of brands: Indian brands have not made inroads into the international market to a large extent. However, FoodPro, the exhibition on food processing industry organised by the Confederation of Indian Industry (CII), has highlighted that Indian foods in processed form are in demand. For instance, the supermarkets in the UK are paid to stock £2 billion of Indian ready-to-eat and cooked foods.

Threats to industry

  • Increasing Competition: The lack of economies of scale and increasing penetration by multinational corporations pose a potential threat to a large number of Indian players in the coming years. The removal of quantitative restrictions on imports and exports have further aggravated the challenge to domestic producers
  • Quality standards: Given the fragmented nature of the industry as also the wide geographical spread of the market, the principal challenge for agencies enforcing food laws is trained manpower and testing facilities. Food adulteration is rampant. Marketing sub-standard quality, mixing low-price inferior substitutes with superior quality food, misbranding, passing off one product as another, cheating in weights and similar acts of skullduggery are not controlled strictly. Continuation of these practices on a larger scale is adversely affecting consumer confidence, thus indirectly shrinking the market size for these products.
  • Labelling and traceability: In the backdrop of fragmented food production facilities, the long supply chain and the non-uniform quality of raw materials and ingredients, food manufacturers are prone to be more reluctant towards labelling and traceability provisions. However, to advance consumer welfare and safety, the foods placed on shop shelves are to be so labelled as to facilitate traceability of the supplier of food or raw material/ingredient Moreover, labelling and traceability have become issues of great import for food manufacturers in most developed economies (Exports to the European Union, for instance, have to conform to labelling and traceability standards on genetically modified foods). Following low price-elasticity for processed food products, the rising consciousness about the nutritious food and increasing awareness among the consumers regarding food safety, lax approach on the part of manufacturers poses threat in terms of the of loss potential market at domestic as well as international levels. Thus, the challenge lies in retaining the nutritional value, flavour, aroma, and texture of foods, and presenting them in near natural form with added conveniences.

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