Undermining Markets: When Government Intervention Hurts More Than It Helps

  • Government intervention, though well intended, often ends up undermining the ability of the markets to support wealth creation and leads to outcomes opposite to those intended.
  • Four examples of anachronistic government interventions:

1. Essential Commodities Act (ECA), 1955:

  • Frequent and unpredictable imposition of blanket stock limits on commodities under ECA distorts:
  • The incentives for the creation of storage infrastructure by the private sector.
  • Movement up the agricultural value chain.
  • Development of national market for agricultural commodities.
  • Imposition of stock limits on dal in 2006-Q3, sugar in 2009-Q1 and onions in September, 2019 spiked up the volatility of the retail and wholesale prices of onions.
  • The Ministry of Consumer ....
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