Context:

• In view of the situation in West Asia, the Central Government has invoked the Essential Commodities Act, 1955 for natural gas.

Key Points:

• Main reason for implementation: Due to the current situation in West Asia (mainly the Iran–USA–Israel conflict).
• Because of this conflict, shipments of Liquefied Natural Gas (LNG) and LPG passing through the Strait of Hormuz have been disrupted.
• Several suppliers have invoked the force majeure clause, increasing the risk of supply shortages in import-dependent countries like India.
• India imports around 60–70% of its total LPG requirement, of which 80–90% comes from the Middle East, passing through the Strait of Hormuz.
• Under the Essential Commodities Act, 1955, the Ministry of Petroleum and Natural Gas has notified the Natural Gas (Supply Regulation) Order, 2026.
• The notification states that supply will be maintained subject to 100% operational availability of the average gas consumption of the last six months.
• Coverage: Applicable across India.
• Control: The government can fix prices and determine stock limits for essential commodities.
• Penalty for violation: Imprisonment from 3 months to 7 years, or fine, or both.

Essential Commodities Act, 1955

• It is an important central law enacted in 1955, aimed at regulating the production, supply, distribution, storage, and trade of essential commodities in the interest of the public.

The Act empowers the government to:

• Prevent hoarding and black marketing.
• Avoid artificial shortages.
• Ensure availability at fair prices.
• Re-allocate commodities during emergencies.

Background

• Food Crisis: The Act was introduced in 1955 when India faced a severe food shortage due to low agricultural production.
• Import Dependence: India relied heavily on imports and food aid, including wheat supplied by the United States under the Public Law 480 programme.
• Control of Hoarding: The Act aimed to ensure proper distribution of essential commodities and curb hoarding and black marketing.

Major Provisions

• Powers of the Central Government (Section 3): The Central Government can declare any commodity as “essential” and impose stock limits.
• Delegation of Powers (Section 5): The Central Government can delegate its powers to state governments or their officials for effective enforcement.
• Penalty (Section 7): Violation of orders under the Act can lead to imprisonment (3 months to 7 years) and a fine.
• Cognizable Offences (Section 10A): Offences under this Act are cognizable.

Major Commodities Covered Under the Act

• Food items: Edible oils, pulses, cereals
• Energy: Petrol, diesel, kerosene, LPG
• Health: Medicines, masks, sanitizers
• Others: Fertilizers

Examples of Implementation

• Stock Limits on Edible Oils and Pulses (2021–22): The government imposed stock limits on traders when prices of pulses (like tur and urad) and edible oils increased sharply.
• Face Masks and Sanitizers (2020): During the COVID-19 pandemic, these items were declared essential commodities to control prices and ensure availability.
• Potato and Onion Control: When onion prices rise sharply, the government uses this law to restrict exports and inspect traders’ stock holdings.
• Fertilizers: Always regulated to ensure farmers receive fertilizers at the right time and price.
• Petroleum Products: Petrol, diesel, and kerosene supply and distribution are regulated under this Act to ensure uninterrupted availability across the country.
• Operational Mechanism: States are empowered to conduct raids, confiscate goods, auction seized items, and take legal action against violators.

Amendment of 2020

• In 2020, Parliament amended the Act and limited the powers of the central government to regulate certain commodities such as cereals, pulses, potatoes, onions, edible oilseeds, and edible oils only under extraordinary circumstances.
• These include war, famine, extraordinary price rise, or natural calamities of severe nature.

Strait of Hormuz

• The Strait of Hormuz is a narrow sea passage connecting the Persian Gulf with the Gulf of Oman and the Arabian Sea.
• It is the world’s most important oil chokepoint, through which about 20% of global oil and LNG exports pass.
• Major oil exporters using this route include **Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates and Qatar.
• More than 80% of this oil goes to Asian markets, mainly India, China, Japan, and South Korea.
• Location: Iran to the north and Oman/UAE to the south.
• Length and Width: About 167 km long and 33 km wide at its narrowest point.
• Geopolitics: Due to the presence of US and Iranian naval forces, it remains a high-tension strategic zone. Closure could trigger a global energy crisis.
• Impact on India: India depends heavily on this route for its LPG and crude oil imports.