Essential Commodities Act

Syllabus: General Studies Paper 2

With tur dal prices surging since mid-July and reports coming in of some traders creating artificial supply squeeze by restricting sales, the Centre has invoked the Essential Commodities Act of 1955 to ask States to monitor and verify the stocks available with such traders.

Tur prices have risen since mid-July amid slow progress in kharif sowing as compared to last year due to excess rainfalls and water logging conditions in parts of major Tur growing states of Karnataka, Maharashtra and Madhya Pradesh, the Department of Consumer Affairs has noted in its rationale for the directive.

Essential Commodities Act,1955 

• It aims to ensure smooth and easy availability of essential items to consumers.
• Under the act,the Government regulates the production, supply and distribution of certain 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.
• The State Governments are the implementing agencies to implement the EC Act,1955 along with the Prevention of Black marketing & Maintenance of Supplies of Essential Commodities Act,1980.
• The ECA 1955 is used to curb inflation by allowing the Centre to enable control by state governments of trade in a wide variety of commodities.
• There is no specific definition of essential commodities in the Essential Commodities Act, 1955.
• Section 2(A) states that an “essential commodity” means a commodity specified in the Schedule of the Act.

Issues Related to Essential Commodities Act 1955

• The government intervention under the ECA 1955 often distorted agricultural trade while being totally ineffective in curbing inflation.
• Such intervention does enable opportunities for rent-seeking and harassment. Rent-seeking is a term used by economists to describe unproductive income, including from corruption.
• Traders tend to buy far less than their usual capacity and farmers often suffer huge losses during surplus harvests of perishables.
• This led to farmers being unable to get better prices due to lack of investment in cold storage, warehouses, processing and export.
• Owing to these issues, the Parliament passed the Essential Commodities (Amendment) Bill, 2020. However, due to farmers’ protest the Government had to repeal this law.