What is Essential Commodities Act, 1955?

Amid disruptions in global energy markets due to the conflict in West Asia, the Government of India has invoked the Essential Commodities Act, 1955 to divert limited liquefied natural gas (LNG) supplies to priority sectors.

The order, issued on March 9 by the Ministry of Petroleum and Natural Gas (MoPNG), categorises consumers into four priority groups based on their average gas consumption over the past six months.

Priority Allocation

1. Domestic PNG users (Households):
   • Highest priority
   • Will receive 100% of their average gas consumption over the past six months.
2. Fertiliser units:
   • Second priority
   • Allocated 70% of their six-month average consumption.
3. Tea industries, manufacturing and other industrial consumers connected to the national gas grid:
   • Third priority
   • Will receive 80% of their average consumption.
4. Commercial and industrial consumers served by city gas distribution companies:
   • Fourth priority
   • Also allocated 80% of their six-month average consumption.

About the Essential Commodities Act

The Essential Commodities Act, 1955 empowers the government to regulate the production, supply, distribution, and pricing of key commodities in the public interest.

Commodities defined as essential under the Act include:

• Cattle fodder
• Coal and its derivatives
• Automobile components
• Cotton and wool textiles
• Drugs under the Drugs and Cosmetics Act, 1940
• Foodstuffs
• Iron and steel
• Raw cotton and raw jute
• Any other commodity notified by the Centre.

2020 Amendments

In June 2020, the government amended the Act to remove several agricultural commodities from the essential list, including cereals, pulses, potatoes, onions, edible oilseeds and edible oils. After the amendment, the Centre can regulate these commodities only under extraordinary circumstances such as:

• War
• Famine
• Extraordinary price rise
• Severe natural calamities

The amended law also specifies price-trigger thresholds for intervention:

• 100% increase in retail prices for horticultural produce
• 50% increase in retail prices for non-perishable agricultural food items

Source: IE