Economic Highlights

New Delhi, 24 October 2014

Shrameva Jayate

CRITICAL FOR CONSUMERS

By Shivaji Sarkar

Prime Minister Narendra Modi’s ‘make in India’ gets another boost as the Department of Industry is simplifying registration process of companies. The ease of business is always welcome. It has to come also with simplification of licence procedures, inspections, tax system and free movement – without paying bribes on the road.

The corporate needs space. Nobody doubts. It has also to come with the “ease” of the consumers to select. There is a law for consumer protection, but it is a cumbersome process. Reaching it for every complaint is not possible. Besides, the consumer laws do not prevent cartelization, mergers, acquisition and unethical pricing often in collusion with all the manufacturers.

The Competition Act 2002 is supposed to protect that. Somehow this is not happening. Since the law was enacted and till the abolition of Monopolies and Restrictive Practices Act in 2009, the alibi was of duplicity in applying the law. During all these years monopolies have strengthened. It has become difficult for a consumer to get his grievances redressed. Not only that all large manufacturers have been cartelizing but are also resorting to predatory practices to eliminate competition.

Unfair trade practices, introduced in this country by companies such as Coca Cola and Pepsi for gobbling up their competitors to create monopoly market, have not only robbed the opportunity of consumers to look for a choice but also have enormously harmed the working class, who are not given even the minimum benefits assured in the laws.

This goes against another pious concept of Modi – “Shrameva Jayate” (Victory of labour). The labour or ‘shram’ is being shorn of the dignity, what the Prime Minister aimed at while launching the Deendayal Upadhyay Shrameva Jayate scheme. Dignity and rights of labour are essential for the country to become a manufacturing hub. The lack of self-esteem and more fire than hire is also creating an aversion among the working class to labour for such exploitative organizations. Additionally, outsourcing has become a norm for denying the basics to the working class.

The ease of the consumer, that also means the large work force, is essential for many reasons. The consumer needs affordable prices. The cartelized corporate through creating large monopolies are preventing the consumer from getting the lowest prices. The companies create an illusion by offering what they say is ‘best price” through elimination of competition.

Today, no consumer knows the right price for tea, cosmetics or a shaving blade. The market has been convoluted during the past over ten years by allowing elimination of most Indian or indigenous producers. Virtually few exist today, with some exceptions. The companies that even exist are practically working for their competitors under pressure from them. So today we have too many monopolies in the consumer or FMCG areas.

Some Indian companies, be it in dairy product, confectionaries or food processing, have under duress joined the race with their competitors to help enhance profits. It is happening everywhere. Large foreign companies are edging out Indians and even telling them to follow their unethical practices to exploit the consumers.

Services from all these companies have become difficult. Earlier, products had a standardization. This helped the consumers get access to the easy services provided by the neighbourhood mechanic. Spare parts were easily available. Now it is just the contrary. By minimal changes in designs of spare parts, they are not only insulting the skill of neighbourhood mechanics but are also forcing the consumers to take “service” from them at a premium. They would not sell even a nut-bolt. The stock answer is “our men would only fix it. You have to pay “service charges” up to Rs 600 for his visit”.

The consumer grudges but has little option having invested in a product that has also been priced almost double its manufacturing price. Should they go to consumer courts for each of the audacities of the manufactures? Cannot there be another mechanism to help them get justice?

Undeniably, the heightening profits of these companies in any sector or rather in all sectors have made the lives of consumers miserable. This also makes manufacturing difficult because products are priced and serviced beyond the affordable limits of the consumer. It limits sale as also restricts the market for a competitor because the old ones create immense problem for new manufacturers. That is to hamper the significant “make in India” objective.

Noted economist Adam Smith in, 1776, stated: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices”. John Stuart Mill, hundred years later, stated: “When firms hold large market shares, consumers risk paying higher prices and getting lower quality products than compared to competitive markets”.

This is the risk the country faces if regulations and checks (not controls) are weak. One of the reasons for shifting of manufacturing in the country has been allowing monopolies to thrive after the 1991 Manmohanomics. Effectively it has shifted to China and South Korea. If the nation wants to create the high level of manufacturing as it was till early 1980s, it could be done by ensuring fair play not only for indigenous manufacturers but also for the foreign ones.   

If some unethical ones get the opportunity to edge out others, it may help a dozen large houses to perpetuate the conspiracy, Adam Smith had predicted. Further, it has a political fall-out too. They could become too powerful to ignore the aspirations of the people and weaken the political system. Consumer protection has wider connotation. The Government must not be swayed by the argument that they should be given all freedom to go on rampage in the name of “ease of business”.

The NDA Government is besotted with problems created by misrule of decades. It needs scrutiny and corrections. In all these affairs, the consumer has to be treated as the king, not a mere user. He has to be provided wide protection from the onslaught to ensure quality, right price, standardization of products as per Indian needs, proper spares and not be forced to get “service” from the seller or manufacturer and be protected from their conspiracy. The ease of consumer would ensure a thriving market, where all manufacturing can prosper and the country could take pride in “make in India”. --- INFA

(Copyright, India News and Feature Alliance)