Essential Commodities act

Essential Commodities act

Subject: Legislations

Context: In an attempt to arrest the spiraling prices of pulses, the Union government on Friday directed the States to impose stock limit on all pulses except moong till October 31.

Concept:

Essential Commodities Act

• The ECA was enacted way back in 1955.
• It has since been used by the Government to regulate the production, supply and distribution of a whole host of 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.
• Under the Act, the government can also fix the maximum retail price (MRP) of any packaged product that it declares an “essential commodity”.

How it works?

• 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.
• 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.
• 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.