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The Essential Commodities Act of 1955 prevents retailers from illegally holding and selling essential commodities. The Central Government recently issued a notification order under the Essential Commodities Act declaring masks and hand sanitisers to be Essential Commodities till June 30, 2020. This notice may make selling these two critical goods illegal on the underground market or hoarding them. Masks and hand sanitisers have already been necessary to fight against infection. However, there have been reports from across the country that hand sanitisers and masks are either unavailable or sold at prices higher than the Maximum Retail Price (MRP).
The Essential Commodities Act of 1955 (ECA)
The Essential Commodities Act of 1955 outlaws essential commodity stockpiling or black marketing. It covers the entire country, particularly Jammu and Kashmir. Pulses and edible oils, pharmaceuticals, fertilisers, and petroleum and petroleum derivatives are the necessary items listed underneath the Act. Suppose the Central Government notices that the price of a certain item is rising due to scarcity. In that case, it instructs state governments or union territories to set a stock-holding limit for just that commodity for a set length of time.
What does the act Say Regarding Critical Commodity Production, Supply, and Distribution?
The central government can issue orders to control and prohibit the production and supply, including the transfer of vital goods and trade and commerce in them, under Section 3(1) of the Act. The government might do so if it believes it is “necessary or desirable” to continue increasing supplies of any important commodity.
Any move to impose stock limitations on agricultural products must be predicated on a price increase. Unless the retail price of harvested produce rises by 100% or even the purchase price of ‘non-perishable agricultural foodstuffs’ rises by 50%, an order for restricting the stock limit of these products be issued under this Act. The rise will be over the previous 12-month price or even the average retail price for the previous five years, whichever one is smaller.
These stock limit orders shall not apply to a ‘processor’ and ‘value chain member’ of any agricultural output “…provided the person’s stock limit doesn’t really reach the overall ceiling of existing processing capabilities or even the request for export within an exporter.” Regarding agricultural products, a ‘value chain participant’ comprises those associated with the production, manufacturing, packing, storage, transportation, and distribution — each point in which the product’s value is contributed.
How does it Work?
If the Centre determines that even a product is in low supply and its price rises, it might impose stock-holding restrictions for a set time.
The states respond to this information by establishing restrictions and taking actions to guarantee that they are met.
Anyone who trades or deals in a commodity, whether wholesalers, retailers, or even importers, is prohibited from storing more than a specific amount.
However, a state might select not to impose any limits. However, dealers must immediately sell any stocks owned more than the necessary quantities into the market once it does.
Why is it Important?
The ECA protects customers from unjustified price increases in basic items. The government has used the Act numerous times to ensure appropriate supplies. It takes action against hoarders and black-marketeers of such goods. State authorities carry out Raids to ensure that everyone follows the rules and penalises those who do not.
Conclusion
The Indian Parliament enacted the Essential Commodities Act (ECA) to assure the delivery of respective products or items whose supply, if disrupted by hoarding and black marketing, would harm people’s daily lives. Essential drugs, fertiliser, if inorganic, organic, and mixed; foodstuffs, such as edible oilseeds and oils; hank yarn made completely of cotton; petroleum as well as petroleum products; raw jute and jute textile; seeds of food-producing plants are currently listed as basic commodities underneath the Essential Commodities Act, 1955. According to the Ordinance, the central government has the authority to limit the supply of specific food goods such as grains, pulses, and many others.
