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Essential Commodities Act

1st April – Essential Commodities Act

Essential Commodities Act

Due to the COVID-19 outbreak, the Ministry of Consumer Affairs has brought hand sanitisers and masks (2-ply, 3-ply variety and N95) under the purview of the Essential Commodities Act (EC Act) until June 30.

About Essential Commodities Act, 1955 –

  • Under the EC Act of 1955, if the Central government thinks that it is necessary to maintain or increase supplies of any essential commodity or make it available at fair prices, it can regulate or prohibit the production, supply, distribution and sale of that commodity.
  • Some of the essential commodities listed out in the schedule to this Act are foodstuffs including edible oils and oilseeds, drugs, fertilisers, petroleum and petroleum products.
  • But the Centre has the power to add or remove any commodity in public interest from this list, and that’s what it has done with masks and hand sanitisers.
  • In the past, the Essential Commodities Act was mostly invoked to control the price rise in food products. When the prices of any of these commodities rise, the government imposes stock-holding limits to prevent hoarding, confiscates the stocks of violators and imposes punishment.

Violation –

  • Invoking the Act makes it harder for retailers to hoodwink customers. If they violate the norms, States can take action under the Essential Commodities Act and the Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act (PBMMSEC Act).
  • An offender under the Essential Commodities Act may be punished with an imprisonment of up to seven years and/or fine; and under the PBMMSEC Act, they can be detained for maximum of six months.

Purpose of the Act –

  • In the context of a crisis like the current one, the EC Act seems to serve a purpose. Bringing masks and sanitisers under the Essential Commodities Act will enhance the availability of these products to the public, at fair prices.
  • Producers have been urged to manufacture these up to full capacity over three shifts. The government can take action against hoarders, speculators and those involved in jacking up prices or black-marketing.

Criticism –

In recent years, there has been an argument that the Essential Commodities Act was draconian and not suited for times when farmers face problems of plenty rather than scarcity. The Economic Survey 2019-20 argued that it hampered remunerative prices for farmers and discouraged investment in storage infrastructure.

Recent actions –

  • The Ministry of Consumer Affairs has asked all State governments to issue licences and permit hand-sanitiser makers to store ethanol and extra neutral alcohol (ENA) without any quota restrictions.
  • The Indian Sugar Mills Association and All India Distilleries Association have been asked to ensure that ethanol and ENA are made easily available to producers.
  • Reports indicate prices of ethanol and ENA can not be increased till June 30 and will need to be sold at the price levels as on March 5 this year.
  • By placing them under the EC Act, the government has capped the prices of these masks and hand sanitisers.

SourceThe Hindu Business Line

QUESTIONThe Essential Commodities Act has been at the forefront to fight the social and economic battle against the COVID-19 battle. Comment.

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