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.
• The Ministry of Consumer Affairs must examine whether the ECA is relevant in today’s India. With raids having abysmally low conviction rate and no impact on ....