The Essential Commodities Act 1955 in India has been enacted for the purpose to regulate the production, supply, distribution of a whole list of commodities defined as “Essential Commodities” under the Act so that no section of the population of our country is deprived of the goods considered essential for living. The Government of India by means of fixing a Minimum Retail Price for any packaged product regulates justifiable supply & the supply chain of such commodities and prevents unlawful hoarding, black marketing & unfair trade practices in the market.

The items include Drugs, fertilizers, edible oils, and petroleum products as some of the essential commodities. The government of India oversees the market mechanisms and for the purpose of regulation reserves the power to add/remove any commodity.

1.    How Does It Work?

If the central Government finds that a certain commodity is facing a shortage in the market for e.g. N-95 masks for COVID-19, it can by means of a notification order to limit the stock-holding of masks for each seller/trader. Accordingly, the states shall act on the notification and take steps to ensure that every wholesaler/retailer/ trader or importer is prevented from hoarding any commodity beyond the limit prescribed.

It may be possible for the states to not to hold any restriction for any commodity unless urgently required. However, where any notification is provided by the center the state may require to do comply with the regulations urgently and conducting raids to find if any default has been committed under the Act.

2. What Are Essential Commodities?

The Act does not clearly define the basis for determining “essential commodities” under the Act instead of section 2A “to mean a commodity defined under the Schedule”.

3.    List Of Commodities Under The Act-

Following is the list of commodities provided in schedule to the Act-

1.    Drugs

2.    Fertilizer whether inorganic or organic or mixed;

3.    Foodstuffs including  edible oilseeds & oils;

4.    Hank yarn made from the cotton;

5.    Petroleum & petroleum products;

6.    Raw jute & jute textiles;

7.    Seeds-

i.    Seeds of food crops & seeds of foods & vegetables

ii.    Seeds of cattle fodder

iii.    Jute seeds;

4.    Amendment Announced By The Finance Minister 15.05.2020-

 In the third series to the declarations related to financial relief at the times of global pandemic. In such a time, the Government of India is trying to strengthen the economy for further situations because mishappening like these can happen at any time. The Finance minister Nirmala Sitharaman stated that “When the Act was brought to existence there were conditions of scarcity and to ensure the commodities distribution is fair, efficient & reasonable the regulations were necessary to be implemented”.

Accordingly, with the passage of time, the list has become outdated and the situation of the economy is better than before. Thus, there is an urgent need to amend the Essential Commodities Act to enable better price realization for farmers and giving them opportunities to produce and sell more which will ensure better storage facilities of commodities & continuous supply of goods.

Therefore, for giving a long-term benefit to the farmers it has been decided that the Act shall be amended to deregulate Agriculture foodstuffs, including cereals, edible oils, oilseeds, pulses, onions and potatoes from the list.  This means that these items are now out of the purview of the Act. However, the Government reserves the right to add/ remove any of the items of the list in the times of emergency.


eStartIndia Team

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