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Essential Commodities Act - Amendment

The recent amendment in the Essential Commodities Act, 1955

The novel Coronavirus has a devastating effect on all the economies of the world because, in order to reduce the escalating number of cases the governments of different countries have taken the major step of locking down all the states, cities, and districts due to which the income of all the sectors of the economy was adversely affected, as production and sales of various commodities have stopped due to the lockdown imposed.

Analysis of the amendment

In order to counter this situation, the Indian government has made two major announcements in the month of May 2020 - number one issuance of the relief package for the economy of 20 lakh crores and the second is the amendment in the Essential Commodities Act, 1995 according to which the trade barriers for farmers and agriculture products dealers have reduced. This particular amendment will be a benefit for the farmers as the farmers can directly connect to processors, aggregators, wholesalers, large retailers, and exporters.

The central government also stated that this amendment will embrace the farmers in order to get a greater value of their products and will also help them to attract more investments in the besieged farming sector. One of the major changes made through this amendment is the removal of crops like cereals, pulses, oilseeds, onion, potatoes, and even the edible oils from the index of essential commodities. The government has shown a great in reviving the agriculture sector because of the losses borne by the farmers due to some of the stringent policies in this particular sector. The reason behind this particular amendment in order to remove some items from the list of essential commodities was that in India most of the items that are being produced on a large scale are already surplus in nature the farmers were unable to get the greater value of their produce.

Another reason that led to this amendment was the poor storage facilities available in India such as warehouses and various other cold storages are not well equipped which led to the rotting of the grains and this would lead to wastage of agriculture products. As per the previous law, the farmers had to produce these crops/commodities because they were included in the list of essential commodities. We still cannot miss on one point and that is the agriculture produce can be regulated at the time of emergencies such as war, natural calamity, famines, and extraordinary price rise. Any person who is part of this supply chain or exports will be exempted from paying some extra amount during the above-mentioned scenario. This will also lead to the elimination of fear among private investors excessive regulatory interference in their business operations. This also leads to reforms in the agricultural produce market committees. The Minimum Support Prices (MSPs) of 14 crops have been increased that are 50-83% higher than the cost of cultivation in order to increase the income of the farmers.


An ordinance has introduced a new Sub-clause (1A) in Section 3 in the said legislation there is no particular meaning of basic items in The EC Act. Section 2(A) of the statute expresses that a "particular item" can be added to if it qualifies to be a necessity according to the provisions of this statute. The legislation entitles the central government to exclude particular commodities as essential in nature. As per the current scenario of COVID-19, the government has decided to add hand sanitizers and face masks to this list of essential commodities as given in the schedule. The government has also allocated a sum of rupees 1.5 lakhs crores for the further development of the agriculture sector.

This particular amendment was needed for the farmers as they were not getting the right value of their products and because of the previous law, the farmers had to bear losses. But after this amendment, the farmers are more likely to make a good income and this amendment also provides a direct channel for the farmers, processors, aggregators, wholesalers, large retailers, and exporters which has eliminated many of the trade barriers.


Kshitij Chauhan can be contacted at chauhan.kshitij04@nmims.edu.in

LinkedIn ID: linkedin.com/in/kshitij-chauhan-714506116

Editor: Arushi Gupta

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