Essential Commodities Act

Essential Commodities Act

What are essential commodities?

The government has powers under the Essential Commodities Act, 1955 (EC Act) to declare a commodity as an essential commodity to ensure its availability to people at fair price. The EC Act, 1955 allows the government to control the production, supply, and distribution of these commodities for maintaining or increasing supplies and securing their equitable distribution. Essentially, the act aims to ensure easy availability of important commodities to consumers and check exploitation by traders.

How many commodities are covered by the Essential Commodities Act?

There are seven broad categories of essential commodities covered by the Act. These are (1) Drugs; (2) Fertilizer, inorganic, organic or mixed; (3) Foodstuffs, including edible oilseeds and oils; (4) Hank yarn made wholly from cotton; (5) Petroleum and petroleum products; (6) Raw jute and jute textile; (7) (i) seeds of food-crops and seeds of fruits and vegetables; (ii) seeds of cattle fodder; and (iii) jute seeds. cotton seed was also included in the list.

How Price Rise is Checked?

The Act is implemented by the state governments and union territories, leaving the central government to merely monitor the action taken by states in implementing the provisions of the Act. State and UT administrations use the powers of the Act to impose stock or turnover limits for various commodities and penalise those who hold them in excess of the limit. Stock limits have been imposed in several states for pulses, edible oil, edible oilseeds, rice, paddy and sugar.

How effective is the Essential Commodities Act?

Over the three years 2006-2008 , state and union territory governments prosecuted 14,541 persons under the provisions of EC Act, 1955 and secured conviction in 2,310 cases. In 2009 as on 31 August 2533 persons had been prosecuted and 37 convicted. But, doubts have been raised about effectiveness of the Act time and again. Recently, Parliament’s estimates committee asked the government to come out expeditiously with a new legislation for controlling the retail prices of essential commodities such as rice, wheat, pulses, edible oils, sugar, milk and vegetables.

How the Essential Commo. A. Works?

  1. 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.
  2. 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.
  3. 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.
  4. 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.

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.

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