The Essential Commodities Act: An Overview

The Essential Commodities Act (ECA) was a piece of legislation passed by the Indian Parliament that regulated the supply and delivery of goods whose disruption could have a significant impact on the lives of ordinary people. The necessities for sustaining a typical existence are these items. Therefore, the availability and cost of such commodities have a significant impact on lives of general public. Therefore, the Essential Commodities Act, 1955, has a significant role in regulating the pricing, production, demand, and supply of essential products.

What does Essential Commodities Act Define?

The essential commodities act is legislated with the purpose to control the production, supply, distribution, and also trade and commerce of of some essential commodities in the interest of general public (at large).

Historical Background

The Defence of India Act, 1939, which was passed by the Indian government in response to World War 2, established regulations for the production, distribution, and control of a number of specified commodities. In 1946, the Act became inoperative. In the interest of the general public, it was believed that some restrictions were urgently required for the protection of several critical commodities. The Essential Supplies (Temporary Powers) Act, 1946 replaced the 1946−passed Essential Supplies (Temporary Powers) Ordinance. In 1948 and 1949, the General Assembly passed two resolutions that substantially expanded this Act's contents. The first Essential Commodities Ordinance was enacted upon independence by the Third Constitutional Amendment, and it was later superseded by the current Act, The Essential Commodities Act, 1955.


The scope of this Act is pretty wide and covers entire India. The Act stipulates laws pertaining to the regulation and control of production, price, and distribution of the necessary commodities because it was passed in order to guarantee consumers' access to important commodities and shield them from the exploitation of dishonest dealers. And also to keep up with or boost the supply of these crucial commodities and to ensure the availability and fair distribution of these necessities.

Essential Commodities

According to Section 2(A) of the Act, an item that falls within Entry 33 of List III (Concurrent List) of the Seventh Schedule to the Constitution of India qualifies as an "essential commodity." The government may also set the maximum retail price (MRP) of any packaged good it designates as an "essential commodity" under this Act.

The Act's Schedule contains the following −

  • Defined under clause b of Section 3 of the Drugs and Cosmetics Act, 1940.

  • Fertilizer

  • Foodstuffs

  • Hank yarn

  • Petroleum

  • Jute

  • Seed


According to the Act, a collector is defined as an additional collector or any other officer who is not a subordinate officer but has been given permission by the collector to carry out the powers and duties of the collector.

Amendment Act of 2020

A resolution to update the ECA has been agreed by the Union Cabinet. The ordinance may have included a new subsection (1A) under Section 3 of the ECA, 1995. The modified law offers a system for "regulating" agricultural goods, such as grains, pulses, oilseeds, edible oils, potatoes, and onions, as well as supplies under extraordinary conditions, such as an unusual price increase, war, famine, or a terrible natural disaster. It's interesting to note that removing onions from the EC Act is regarded as a bold move given the long history of government action whenever onion prices rise. Due to the COVID−19 outbreak, hand sanitizers and face masks were deemed critical items. Priced at Rs. 12,000 are masks with a retail price of Rs.300 and Rs. 100, and hand sanitizers with a price of Rs. 40. Therefore, the government made a firm decision to stop corrupt business activities. Under the provisions of the EC Act, the Central Government issued an order on March 13 approving N95 masks, 2 and 3 ply surgical masks, and hand sanitizers as essential commodities till June 30, 2020. Additionally, it has issued a Legal Metrology Act advisory to make sure that such products are not sold for more than the MRP.


It defines −

  • Defending consumers from unreasonable price increases on necessities.

  • The Act has been activated numerous times by the government in an effort to guarantee adequate supplies.

  • It takes tough measures against those who hoard and sell such goods illegally.

  • Raids are being conducted by state agencies to enforce the laws and punish those who break them.

Act's Purpose

The Essential Commodities Act has criminal punishment that include up to seven years’ imprisonment, a fine, or both. Under the Prevention of Black Marketing and Maintenance of Supplies of Essential Calamity Act, 1980, the state and union territory governments may also take the detention of criminals into consideration. According to the PBMMSEC Act, an accused person can also be imprisoned for a maximum of 6 months in addition to receiving a fine or a sentence of up to 7 years in jail.

The Central Government's Authority Under the Essential Commodities (Section 3)

For the benefit of the general public, the Central Government occasionally adds and removes any commodity from the schedule. However, under entry 33, list 111 of the 7th schedule of the constitution, the goods in relation to which such rights are exercised must be given.

Price regulation pursuant to Section 3(3) of the Essential Commodities Act of 1955

It includes −

  • When the parties have previously reached an understanding about the restricted price set forth in this section.

  • Controlled price− The price is determined using controlled pricing when an agreement cannot be reached.

  • In cases where neither of the aforementioned prices apply, the price is determined based on the current local average market rate.

Paying the Purchase Price (Section 3B)

The restricted price set forth in this law or any other law that is currently in effect with respect to such food crops, edible oilseeds, or edible oil.

  • The general outlook for the crop

  • The requirements for this grade or variety

  • The Agricultural price commission's suggestion


One of the crucial pieces of national legislation that pertains to safeguarding the interests of the general public is the Essential Commodities Act of 1955. This Act gives the Central Government extensive authority to regulate the supply and production of necessities. The price of the necessary goods that have been taken or confiscated is controlled by the Central Government under this Act. For the market to remain stable, all such regulations are essential.

Frequently Asked Questions

Q. What is an Eessential Commodity?

The Essential Commodities Act doesn't provide a precise definition for the phrase "essential commodities." An item is considered an "essential commodity" in accordance with Section 2(A) of the Act if it is included in Entry 33 of List III (Concurrent List) of the Seventh Schedule to the Constitution of India. Any packaged goods that the government identifies as an "essential commodity" under this Act may have its maximum retail price (MRP) established by the government.

Q. What most recent amendments have been made to the Act?

Criminal penalties under the Essential Commodities Act can result in fines, imprisonment for up to seven years, or both. The state and union territory governments may also consider the arrest of criminals under the Prevention of Black Marketing and Maintenance of Supplies of Essential Calamity Act, 1980. The PBMMSEC Act states that in addition to a fine or a sentence of up to 7 years in prison, an accused individual may additionally be sentenced to a maximum of 6 months in jail.

Updated on: 19-Dec-2022


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