In any well governed economic system the government legislates laws to prevent industrial practices that are unfair and detrimental to the overall functioning of the national economy. In this respect all well governed nations have legislation to discourage monopoly practices and a commission to check this. India too has a similar commission, called the Competition Commission of India, to deal with such cases. Yet like all other institutions in the country this too has become disfunctional, thanks largely to our government, which has been habitually over riding its own regulations.
Discriminatory product pricing unfairly aids manufacturers in earning super profits and distorts national economy (Picture: TEd)
After coming under intense criticism from the public for its failure in managing the rising Corona cases, the Central government negotiated with the manufacturers, the vaccine price of Rs 150 per vial for the requirement of it’s own vaccination programme, Rs 400 per vial for the requirement of the states’ programmes and Rs 600 per vial for vaccinations at the private hospital.
This laid it bare to even greater criticism for allowing discriminatory price fixing by the suppliers. The government defended itself by stating that the states were free to negotiate lower price for their own vaccine supplies, with the manufacturers. However, to what extent the states would be able to get the reduction in vaccine price, fixed for them by the manufacturers in consultation with the central government, is an issue that only the centre can answer.
Even at Rs 150 per vial the manufacturers are earning what the economists label as normal profits. But by allowing the two vaccine manufacturers to fix higher prices for the states and private hospitals than that for it’s own vaccination programmes, the government has laid itself open to criticism, that it is aiding the two vaccine manufacturers to earn super profits. And, in this, the critics cannot be faulted. They are raising a legitimate concern by questioning the economic logic behind the government’s approach.
As a matter of fact no well governed country in the world allows such brazen discriminatory pricing of products by its manufacturers. If manufacturers are found indulging in such practices they are immediately served notices and investigated under relevant clauses of the anti Monopolies Act. Especially, since discriminatory product pricing not only unfairly aids manufacturers in earning super profits but also distorts the national economy from operating at its utmost efficiency.
For this reason the countries across the world have hefty fines if the manufacturers are found indulging in such pricing practices of their products. In contrast, defying sound economic logic, it is unfortunate that we have a government, which disregards it’s own rules and encourages crass commercial behaviour by the manufacturing companies in such dire times, when people are dying for want of basic health care facilities for dealing with the pandemic.
SHRIKANT MODAK studied at the London School of Economics and Political Science and held senior positions with the Economic Times, Business Today and Business India. He can be reached at shrimod@rediffmail.com.
Opinions expressed in this article are of the author’s and do not represent the policy of The Edition. The writer is solely responsible for any claim arising out of the contents of this article.
Tags: #Covid19 #CoronaVirus #Pandemic #Competition CommissionofIndia #Vaccine #AntiMonopoliesAct
The Edition 