The Indian government has invoked the Essential Commodities Act, 1955, in the regulation, management, and equitable distribution of petroleum products and gas. This decision by the government has given it the powers to ensure that fuel is made available, preventing any hoarding, in the wake of disruptions in the global energy market due to the conflict in Iran.
This decision by the government is to ensure that Indian consumers are not affected by any fuel shortage in the wake of the conflict, which may affect the shipping routes, especially the Strait of Hormuz, an important shipping route for the global energy market.
Why the Iran Conflict Is Raising Energy Concerns
The ongoing war between Iran, Israel, and the United States in West Asia is now starting to influence other areas beyond the war zones. India relies heavily on imported Liquefied Petroleum Gas to meet its demand for it, and a considerable portion of it is imported from countries in West Asia.
Despite these issues, the central government has assured citizens that the situation is being closely monitored and that there is no need to worry since there is no shortage of fuel at present.
Government Monitoring Global Supply Chains
In his speech in Parliament on Monday, S. Jaishankar said, “The developments in West Asia are a ‘deep cause for concern’. We are carefully observing the developments to understand how they will impact global energy markets and energy supplies.”
Jaishankar said that the long period of instability in the region has the potential to disrupt trade routes, trade activities, and the flow of energy resources, which are essential for India’s economic growth.
What Is the Essential Commodities Act?
The Essential Commodities Act, 1955 is a legislation framed by the Government of India with the intention of ensuring the availability of essential commodities in sufficient quantities at reasonable prices to the citizens of India and to prevent hoarding, black marketing, and artificial scarcity of essential commodities. Under this legislation, the central government has the right to control the production, distribution, and storage of essential commodities in India and can impose restrictions on the stock of essential commodities, control prices, and restrict trade in essential commodities in India. The government can delegate this power to the state government for effective administration of the law. Essential commodities are those essential for living and are in great demand in India, such as food grains, edible oils, fertilizers, medicines, and LPG gas, etc.
The Essential Commodities Act, 1955 has been amended in 2020 with the intention of restricting the government’s intervention in the trade of certain agricultural products, except in extraordinary circumstances like war, famine, and natural calamities, etc.
Powers Given to the Government Under the Law
Section 3 of the Act has conferred upon the central government the authority to regulate the production, supply, and distribution of essential commodities. Moreover, under Section 5 of the Act, it is provided that the central government can delegate its powers to the state government or officials for efficient control and enforcement of the provisions of the Act.
Changes Made to the Law in 2020
In 2020, Parliament has amended the Act to curtail the government’s powers in controlling certain agricultural products like cereals, pulses, potatoes, onions, and edible oils. These restrictions are in place unless in extraordinary circumstances like war, famine, excessive price rise, and natural calamities.
However, petroleum products and LPG are still under the essential commodity list.
Steps Taken to Boost LPG Supply
In the aftermath of the latest decision, the central government has asked the refineries to raise LPG production and meet the household demand first. The refineries have been asked not to allocate the LPG constituents like propane and butane for the production of petrochemicals.
The aim is to utilize the fuel resources in hand for the purpose of meeting the LPG requirements of the people in the present geopolitical scenario.
