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Eco Survey 2020: Govt intervention in market hurting more than helping

Jan 31, 2020 15:31 IST

The Economic Survey said intervention by the government, ends up undermining the ability of markets to create wealth and leads to outcomes that are the opposite of the intention. The survey, which forecasts growth of 6-6.5% in the next financial year, gave the examples of commodities, drugs, foodgrain and debt waivers to illustrate the point. The survey said, the frequent imposition of blanket stock limits on essential commodities neither brings down prices nor reduces price volatility. Secondly, the regulation of drug prices has led to an increase in the prices of particular drugs under government lens. Third, govt policies in the foodgrain market have led to the emergence of the government as the largest producer and hoarder of foodgrains, adversely affecting competition in these markets. Finally, analysis of debt waivers given by the States/Centre shows that full waiver beneficiaries consume less, save less, invest less and are less productive after the waiver when compared to the partial beneficiaries, thereby defeating the very purpose of the debt waiver provided to farmers.

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