Economy

KEY POINTS

·         National Anti-profiteering Authority (NAA) was constituted to crack down firms that fail to pass on the benefits of the tax regime to consumers.

·         It is empowered to order businesses to reduce product prices or refund the undue benefits earned, back to customer.

·         In extreme cases, it can even impose a penalty on errant firms and cancel their registration with GST.

Issues with NAA

·         It disregards the laws of supply and demand.

·         It ignored the fact that, prices are determined by the free market forces rather than input costs that a business incurs to bring a product to the market.

·         There is no clarity on how the government will ascertain the difference between undue profit and fair play.

·         NAA might not heed to people’s interest for goods. It might lead to a pre-liberalization policy of state mandated production of goods.

Solution

·         Without ensuring competitive markets and financial inclusion, measures like creating NAA will not give fruitful results.

·         So, NAA will be effective only if, it focuses on select firms raising prices indiscriminately and leaving market forces undisturbed.

·         Hence, the authority’s should use their powers transparently and only where there is genuine consumer/public interest at stake.

·         Protecting consumer interest is important, but the prospect of the government monitoring prices and asking businesses to justify pricing decisions instead of letting market forces play out is discomforting.

Please review.