| Prelims : (Economics + CA) Mains : (GS 2 – Governance and Public Policy; GS 3 – Energy Security, Economic Regulation) |
Amid disruptions in global energy supply routes near the Strait of Hormuz, the Government of India invoked the Essential Commodities Act to ensure the availability of cooking gas in the country.
The Act enables the government to regulate the production, supply, and distribution of essential goods, allowing authorities to prioritise domestic LPG supply, increase local production, and allocate natural gas to essential sectors during emergencies.
Global geopolitical tensions in West Asia have raised concerns about disruptions in energy shipments passing through the Strait of Hormuz.
This narrow maritime passage is one of the world’s most critical oil and gas transit routes, handling a large share of global energy trade.
India imports a significant portion of its Liquefied Petroleum Gas (LPG) and Liquefied Natural Gas (LNG) through this route. Any disruption in supply could create shortages in domestic cooking gas availability.
The government therefore used emergency provisions under the Essential Commodities Act to ensure adequate supply and prevent panic buying or hoarding.
The Essential Commodities Act is a law enacted by the Indian Parliament to ensure the availability of essential goods at fair prices.
The Act empowers the government to regulate the production, storage, distribution, and pricing of certain commodities considered essential for the public.
Under Section 3 of the Act, the government can take several measures to maintain adequate supply of essential commodities.
The Act can be invoked during emergencies such as shortages, natural disasters, or geopolitical disruptions.
The Act has historically been used to address shortages in commodities such as :
It was also invoked during the COVID-19 lockdown to curb hoarding and black marketing of essential goods and medical supplies.
Escalating tensions in West Asia and disruptions near the Strait of Hormuz have affected global energy shipments.
A large share of India’s energy imports passes through this chokepoint, making the country vulnerable to supply disruptions.
Concerns about disruptions to LPG shipments triggered fears of possible shortages among households and businesses.
Cooking gas is an essential household energy source across India.
The expansion of the Pradhan Mantri Ujjwala Yojana significantly increased LPG coverage from about 62% of households in 2016 to nearly universal coverage today.
As a result, national demand for LPG has risen sharply.
India’s domestic LPG production remains insufficient to meet demand.
Nearly 90% of LPG imports pass through the Strait of Hormuz, highlighting India’s vulnerability to geopolitical disruptions.
The government directed oil refineries to divert hydrocarbon streams such as propane and butane toward LPG production instead of petrochemical manufacturing.
The directive was expanded to include Special Economic Zone (SEZ) refineries and petrochemical complexes, requiring additional hydrocarbon streams such as propylene and butene (C3 and C4 streams) to be used for LPG production.
The directive applies to major public and private sector refiners, including :
According to government estimates, these measures have increased domestic LPG production by around 25%, helping mitigate immediate supply risks.
The government has instructed oil marketing companies to prioritise LPG supply for households.
Commercial users such as restaurants, hotels, and hostels may face reduced supply temporarily.
The government has introduced a priority-based natural gas allocation system, overriding existing contracts to ensure essential sectors receive adequate supply.
The top priority sectors include :
These sectors will receive 100% of their average consumption over the past six months, subject to availability.
Fertiliser manufacturers will receive around 70% of their normal gas supply, although allocations may be adjusted during the kharif agricultural season.
Gas supplies for other sectors have been reduced :
Some petrochemical facilities operated by companies such as Oil and Natural Gas Corporation, GAIL Limited, and Reliance Industries Limited may experience partial or full LNG supply cuts.
1. Protecting Household Energy Security
Ensuring uninterrupted LPG supply is critical for millions of households that rely on cooking gas.
2. Managing Energy Supply Disruptions
The Act allows the government to respond quickly to global supply shocks.
3. Preventing Hoarding and Price Manipulation
Regulatory powers under the Act help prevent black marketing and price spikes during shortages.
4. Ensuring Strategic Resource Allocation
Priority allocation ensures essential sectors such as transport, households, and agriculture receive energy supplies first.
India may need to adopt long-term strategies to reduce vulnerability to energy supply disruptions, including :
Such measures can enhance energy security and resilience in the face of geopolitical uncertainties.
FAQs1. What is the Essential Commodities Act, 1955 ? It is a law that empowers the government to regulate the production, supply, and pricing of essential goods to ensure their availability at fair prices. 2. Why was the Act recently invoked ? The government invoked it to manage LPG supply disruptions caused by geopolitical tensions near the Strait of Hormuz. 3. What commodities can be regulated under the Act ? Essential goods such as food grains, edible oils, fuels, fertilizers, drugs, and seeds can be regulated. 4. How does the Act prevent hoarding and black marketing ? It allows the government to impose stock limits, price controls, and distribution regulations. 5. Which sectors receive priority in natural gas allocation during shortages ? Priority is given to household piped gas, CNG for transport, LPG production, and pipeline compressor fuel. |
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