The Essential Commodities Act, 1955 was enacted to ensure easy availability of essential commodities to the consumers and to protect them from exploitation by unscrupulous traders. The Act provides for regulation and control of production, distribution and pricing of commodities, which are declared as essential for maintaining or increasing supplies or for securing their equitable distribution and availability at fair prices. Most of the powers under the Act have been delegated to the State Governments.
The list of commodities declared as "essential" is reviewed from time to time in the light of changes in the economic situation and particularly with regard to their production, demand, and supply. From 15 February 2002, the Government removed 11 classes of commodities in full and one in part from the list of essential commodities declared earlier. In order to accelerate economic growth and to benefit consumers, two more commodities have been deleted from the list from 31 March 2004. At present the list of essential commodities contains 16 items.
In the context of liberalisation of Indian economy, it was decided that the Essential Commodities Act, 1944 may continue as an umbrella legislation for the Centre and the States to use when warranted allowing, however, a progressive dismantling of the control and restrictions. Accordingly, the Central Government issued the Removal of Licensing requirements, Stock limits and Movement Restrictions on Specified Foodstuffs Order, 2002 on 15 February 2002 under the Essential Commodities Act, 1955 allowing dealers to freely buy, stock, sell, transport, distribute, dispose, etc., any quantity in respect of wheat, paddy/rice, coarse grains, sugar, edible oilseeds and edible oils without requiring any license or permit therefore under any order issued under the Act.
Similar restrictions in respect of a few more items of foodstuffs viz., pulses, gur, wheat products (namely, maida, rava, suji, atta, resultant atta and bran) and hydrogenated vegetable oil or vanaspati have also been removed by notification/order dated 16 June 2003. Further, through this notification the said Central Order of 15 February 2002 has been amended to amplify the definition of ''dealer'' to include producer, manufacturer, importer and exporter. However, the Order has been amended to the extent that the rice levy orders have been retained to ensure price support to the farmer, while also ensuring adequate availability of rice at the disposal of the FCI/State Government agencies for operating the PDS/Welfare Schemes. Similarly, producer, manufacturer, importer and exporter of sugar have been excluded from the purview of the aforesaid Order as to facilitate issue of direction regarding stocks, storage, etc., of sugar particularly in the context of the prevalence of release mechanism/levy sugar quota and also to provide minimum support price to sugar cane growers.
