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The Essential Commodities Act (ECA) was enacted by the Central Government in 1955 to

control and regulate trade and prices of commodities declared essential under the Act. The Act is
again in the limelight, as the Government is making it more stringent while bringing onions
and potatoes under its purview. Here are some facts about its provisions that you may want to
know and explanations about how the Act works.

Under the Essential Commodities Act 1955, the State Governments/UT Administrations have
issued various control orders to regulate various aspects of trading in essential commodities such
as foodgrains, edible oils, pulses, kerosene and sugar etc. The Central Government regularly
monitors the action taken by State Governments/UT Administrations to implement the
provisions of the Act.
The Government is empowered to enlist any class of commodity as essential commodity as well
as regulate or prohibit the production, supply, distribution, price and trade in any of these
commodities for the following purposes :-
 Maintaining or increasing their supplies.
 Equitable distribution and availability at fair prices of the commodities concerned.
 Securing any essential commodity for the defence of India or the efficient conduct of military
operations.
Essential Commodities in India have been declared in section 2 of Essential Commodities Act,
1955. The essential commodities in India are as follows:
 Cattle fodder, including oilcakes and other concentrates.
 Coal, including coke and other derivatives.
 Components parts and accessories of automobiles.
 Cotton and woollen textiles.

 Foodstuffs, including edible oilseeds and oils.
 Iron and Steel, including manufactured products of Iron & Steel.
 Paper, including newsprint, paperboard and strawboard.
 Petroleum and Petroleum products.
 Raw Cotton, either ginned or unginned and cotton seed.
 Raw Jute.
The following commodities are also declared as essential through notifications:
 Jute textiles.
 Fertilizer, whether inorganic, organic or mixed.
 Yarn made wholly from cotton.
 seeds of food crops and seeds of fruits and vegetables,
 seeds of cattle fodder and
 Jute seeds.
The list of commodities declared as “essential” under the Essential Commodities Act, 1955 is
reviewed from time to time in the light of changes in the economic situation and particularly with
regard to their production and supply.

What does the Act deal with?


The Act empowers the Central and state governments concurrently to control production, supply
and distribution of certain commodities in view of rising prices. The measures that can be taken
under the provision of the Act include, among others, licensing, distribution and imposing stock
limits. The governments also have the power to fix price limits, and selling the particular
commodities above the limit will attract penalties. Black marketing of essential commodities was
a major problem in the past and this has now been controlled to a large extent. The Drug Price
Control Order (DPCO) and such other orders have been issued under the powers of the ECA.

Which commodities does it cover?


Seven major commodities are covered under the act. Some of them are:

1. Petroleum and its products, including petrol, diesel, kerosene, Naphtha, solvents etc
2. Food stuff, including edible oil and seeds, vanaspati, pulses, sugarcane and its products
like, khandsari and sugar, rice paddy
3. Jute and textiles
4. Drugs- prices of essential drugs are still controlled by the DPCO
5. Fertilisers- the Fertiliser Control Order prescribes restrictions on transfer and stock of
fertilizers apart from prices

Through various amendments in the Act in the past, the government removed many products
such as herbicides, fungicides and exercise books from its purview. Onions and potatoes will be
added

In the past, several products such as iron and steel came under the ambit of the Act, but were
removed later. The Union Cabinet has already decided to add onions and potatoes under the
ECA, but the notification is still awaited. The notification will have several clarities such as
executing authorities and stock limits, among others. Both the commodities had been removed
from the ESA through an order on November 25, 2004.

Powers of Central and states governments


The Act empowers the Centre to order states to impose stock limits and bring hoarders to task, in
order to smoothen supplies and cool prices. Generally the Centre specifies upper limits in the
case of stock holding and states prescribe specific limits. However in case there is a difference
between states and the Centre, the act specifies that the latter will prevail.

Penal provisions
At present, section 7(1) a (1) specifies offences which include violations with respect to
maintaining records, books, filing returns and so on. Such offences are punishable with a jail
term of between three months and a year.

Section 7(1) a (2) applies for major offences and embraces a large part of violations where
punishment can extend up to seven years in jail.

Who executes the Act


Food and civil supply authorities execute the provisions of the Act. They generally raid the
premises of the businessmen to find out violations along with the local police, who have the
power to arrest. In case a state doesn’t want to accept the Centre’s suggestion on implementing
any provision of the Act it can do so. There are reports of Maharashtra not imposing stock limits
for onions and potatoes. UP is not enforcing the Act itself.

Proposal to make the Act tougher


The Central Government has now said that it wants to make offences under the Act non-bailable.
Kirti Parekh, an advocate who specializes in the ESA says, “This means that only the court can
grant bail under any Act, not the police. Major offences under the Act are non-bailable as
Criminal Procedure Code says offences attracting a jail term beyond three years are non-bailable.
There is a judgment in case of Prithviraj Shinde v. state of Maharashtra in this connection.”

Commodities Act is an act of Parliament of Indiawhich was established to ensure the delivery of
certain commodities or products, the supply of which if obstructed owing to hoarding or
blackmarketing would affect the normal life of the people. This includes foodstuff, drugs, fuel
(petroleum products) etc.[1][2]
The ECA was enacted way back in 1955. It has since been used by the Government to regulate
the production, supply and distribution of a whole host of commodities it declares ‘essential’in
order to make them available to consumers at fair prices.
The list of items under the Act include drugs, fertilisers, pulses and edible oils, and petroleum
and petroleum products. The Centre can include new commodities as and when the need arises,
and take them off the list once the situation improves.
Here’s how it works. If the Centre finds that a certain commodity is in short supply and its price
is spiking, it can notify stock-holding limits on it for a specified period. The States act on this
notification to specify limits and take steps to ensure that these are adhered to. Anybody trading
or dealing in a commodity , be it wholesalers, retailers or even importers are prevented from
stockpiling it beyond a certain quantity.
A State can, however, choose not to impose any restrictions. But once it does, traders have to
immediately sell into the market any stocks held beyond the mandated quantity. This improves
supplies and brings down prices. As not all shopkeepers and traders comply, State agencies
conduct raids to get everyone to toe the line and the errant are punished. The excess stocks are
auctioned or sold through fair price shops.

ImportanceS
The ECA gives consumers protection against irrational spikes in prices of essential commodities.
The Government has invoked the Act umpteen times to ensure adequate supplies. It cracks down
on hoarders and black-marketeers of such commodities.
But there is another side to the story. Given that almost all crops are seasonal, ensuring round-
the-clock supply requires adequate build-up of stocks during the season. So, it may not always be
possible to differentiate between genuine stock build-up and speculative hoarding. Also, there
can be genuine shortages triggered by weather-related disruptions in which case prices will move
up. So, if prices are always monitored, farmers may have no incentive to farm.
With too-frequent stock limits, traders also may have no reason to invest in better storage
infrastructure. Also, food processing industries need to maintain large stocks to run their
operations smoothly. Stock limits curtail their operations. In such a situation, large scale private
investments are unlikely to flow into food processing and cold storage facilities.
The Act, or the government, also seem to be ineffective in controlling rampant profiteering being
indulged in by numerous companies in the name of "organic" or unprocessed foodstuffs. For
example, it is unbelievable but true that unprocessed rice (a.k.a. brown rice) bears a price that is
two to three times the price of milled or polished rice, though the trading companies make extra
profit by selling the bran resulting from milling as well at a hefty price.
One also finds that foods labeled as 'organic' are sold at astronomical prices in most parts of the
country, though in a few places like Pune these are available at prices that even the poor are able
to afford. Unfortunately, despite such clear evidence of profiteering by companies at the cost of
customers, the government seems either unwilling or unable to stop such malpractices under the
Act.