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How and under what circumstances can the government impose stock limits?

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How and under what circumstances can the government impose stock limits?


With retail prices of onion reaching nearly Rs 100 per kg in some cities, the government has invoked provisions of the Essential Commodities Act, 2020, and imposed onion stock limits of 25 metric tonnes (MT) for wholesalers, and 2 MT for retailers.

  • The stock limit, which comes into effect immediately, will continue until December 31.

About the Essential Commodities (Amendment) law:

It allows it to regulate perishable commodities in an extraordinary situation of price-rise.

Under provisions of this law, any action on imposing stock limit will be based on price-rise.

  • An order for regulating stock limit may be issued only if there is “100%increase in retail price of horticultural produce; or 50% increase in retail price of non-perishable agricultural foodstuffs”, over the price prevailing immediately preceding 12 months, or average retail price of last five years, whichever is lower.

What are the extraordinary circumstances mentioned in the Bill?

(i) war, (ii) famine, (iii) extraordinary price rise and (iv) natural calamity of grave nature.

Exemptions under the law:

Exemptions from stock-holding limits will be provided to processors and value chain participants of any agricultural produce, and orders relating to the PDS.


Prelims Link:

  1. Items included under the original Essential Commodities Act.
  2. Powers to include and remove commodities from the list.
  3. Is it mandatory for the states to follow centre’s guidelines?
  4. Can the govt fix MRP of a product under this act?
  5. Latest amendments.


Discuss the significance of Essential Commodities Act. Why the recent Economic Survey said that this act is outdated and must go? Discuss.

Sources: the Hindu.