Impact of Covid on Essential Commodities Act, 1955

  • WHAT IS AN ESSENTIAL COMMODITY?

There lies no particular definition for the word ‘essential commodity’. But generally, ‘essential’ means urgently necessary or absolutely important. Section 2(A) of the Essential Commodities Act, 1955 states that an ‘essential commodity’ means a commodity identified in the ‘Schedule’ of the Act. The Act confers powers to the Central Government to add or remove a commodity from the Schedule. The main purpose of the Essential Commodities Act is to specifically regulate the production, distribution and supply of essential commodities. The Act was fundamentally enacted to control the prices of food and agricultural products.

If the Centre feels that an item is essential, it can add in the Schedule in public interest after consulting with the state governments. The Schedule contains commodities namely drugs; fertilizers; foodstuff and incredible oils; hank yarn made wholly from cotton; raw jute and jute textiles; seeds of crops, fruits and vegetables; seeds of cattle fodder; jute seed, cotton seed; petroleum and its products.

As the act enables the government to fix prices, it is often censured as drastic and against the interests of the manufacturers.

  • EFFECTS OF LOCKDOWN.

As the nation went into a lockdown, it became necessary to invoke the Essential Commodities Act to curb black marketing and hoarding of essential goods. In these times of difficulty, it became crucial that essential commodities were available to all people at fair prices. Some steps to do so are fixing limits on stocks, increasing production, surveying dealers’ accounts, etc.

After the World Health Organisation (WHO) declared Covid -19 as a pandemic, the National Disaster Management Authority (NDMA) instructed everyone to practise social distancing and to the government to take measures to maintain essential services and supplies. To implement this, the government issued guidelines to shut down commercial and private establishments and industries, except for those who dealt with essential commodities with no reference as to what is included in ‘essential’.

Following the assessment of the economic impact of lockdown 1.0, the Confederation of Indian Industries (CII) put forward recommendations for ease in doing business. It also recommended that sanitary products such as soaps, hand washes, sanitizers, etc. be included in essential commodities and also drew attention to the ambiguity of the term ‘essential commodities’.

  • SANITIZERS AND MASKS AS ESSENTIAL COMMODITIES.

A recent addition to the list of essential commodities has been facemasks and hand sanitizers from the 13th March 2020, to boost its supply and prevent the masses from hoarding it in the wake of the Coronavirus pandemic. By declaring a commodity as essential, the government can exercise control over its production, supply, and distribution. Initially, the newfound demand for sanitizers and masks induced an increase in their prices. But from June 30, 2020, the Centre decided to not extend the status of facemasks and sanitizers as essential commodities as all the states had reported that there were no supply concerns.

  • MEDICINES AS ESSENTIAL COMMODITIES.

The state governments have already conducted various surprise inspections and raids on receiving information of black marketing and hoarding of such medicines. Incorporating these medicines and injections within the Essential Commodities Act during this surge of Covid cases will help stop black marketing while also securing their availability and quality. 

On 19 April 2021, the Centre held a meeting with the Principal Secretaries of the Department of Food and Consumer Affairs of the states and union territories. The Ministry of Consumer Affairs Food and Public Distribution listed essential commodities which included foods and medicines to treat Covid, oxygen supply and hygiene products. The Centre called on the states and union territories to practise a “zero tolerance” policy against hoarders and gave them power under section 3 of the Essential Commodities Act to control the production, supply and distribution of all essential commodities.

On 29 April 2021, the Chief Minister of Chhattisgarh, Bhupesh Baghel wrote a letter to the Union Health Ministry, imploring them to notify the medicines used to treat Covid as essential commodities under the Essential Commodities Act. Demands for special medicines like the Remdesivir injection, Tocilizumab injection, Enoxaparin injection, Ivermectin tablets, Favipiravir capsules and Dexamethasone tablets have risen due to increasing Covid cases making them prone to black marketing and hoarding and all of them should be included in the ambit of essential goods.

  • PENALTY UNDER THE ACT.

Offences given under the Act are termed as criminal offences and have imprisonment up to seven years or fine or both.  Offenders may also be detained by the State or Union territory governments under the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980.

  • AMENDMENT OF GUIDELINES.

In orders dated 25/03/2020 and 27/03/2020, the guidelines under clause (5) dealt with the exemptions for industrial establishments –

  1. Manufacturing units of essential goods, including pharmaceuticals, medical devices, drugs, their raw materials and intermediaries;
  2. Manufacturing and packaging units of fertilizers, pesticides and seeds;
  3. Production units that require a continuous process.

The guidelines under clause (6) expressed that during the lockdown, transport services may remain suspended except –

  1. Transportation of essential good only;
  2. Fire, law and order and emergency services;
  3. Intra and inter-state movement machines related to harvesting and sowing and other agricultural and horticultural implements

Due to these restrictions, the supply chain suffered a major blow and this escalated the crisis in the transport sector and affected businesses at large. Therefore, the government on 29/03/2020 relaxed some conditions and permitted transportation of all essential and non-essential goods. Through this effort, the government helped in streamlining the demand and supply of the economy. Moreover, the government also established around the clock control room with helpline numbers at state and district levels to attend to the grievances and problems faced by goods and service providers during inter-state movement.

  • WHAT IS NEEDED?

As the government has power and control over price and volume, and imposes a myriad of unpredictable restrictions, the Essential Commodities act is considered as brutal. There have been instances where the government passes orders overnight, making future trading contracts futile. The Act needs to be compatible to the present times. Because of Covid-19, the term ‘essential commodities’ has come under spotlight. The way to move forward is to first erase the ambiguity of the word essential commodities. Secondly, all new crucial medicines required to treat the virus must be imbibed under the Act to prevent their exploitation. Thirdly, amendments into the Act must be made after keeping in mind the consequences which farmers and traders might face. The concerned ministries should have eyes on issues and swift actions must be taken whenever need arises.


Author: Malvika Verma from Sandip University, Nashik.


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