Essential Commodities Act

Background and evolution

In the 1950s India faced recurring food shortages, and governments feared hoarding and black-marketing would push prices out of reach of the poor. The Essential Commodities Act 1955 gave the Union government wide powers to control the supply and distribution of essential goods, and to delegate those powers to states. It became a central tool of the licence-and-control economy.

Over time, critics argued that the Act discouraged private investment in storage, food processing and supply chains, because traders feared sudden stock limits and prosecution. In 2020, as part of three farm-sector laws, Parliament amended the Act to remove cereals, pulses, oilseeds, edible oils, onions and potatoes from routine regulation, allowing controls only during extraordinary price rises. After a year of farmers' protests against the farm laws, Parliament repealed all three in 2021, including the amendment to this Act, restoring the earlier position.

Key features and provisions

• Declaration: the Centre can declare a commodity essential by adding it to the Schedule, and remove it.
• Control orders: it can issue orders regulating production, supply, distribution, storage, transport, prices and trade.
• Stock limits: caps on how much traders, wholesalers, retailers, processors or importers can hold.
• Enforcement: states enforce the orders through inspections and seizures; violations are punishable with imprisonment and fines.
• Companion law: the Prevention of Blackmarketing and Maintenance of Supplies of Essential Commodities Act 1980 allows preventive detention of persons hoarding or black-marketing.
• Flexibility: during the COVID-19 pandemic, masks and hand sanitisers were briefly declared essential commodities.