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Consequently, the demand for goods has declined. However, there has been a visible surge in supply as a number of delivery outlets multiply all over the country as more houses turn into shutter-front shops. This should have resulted in fiercer competition, a better quality of goods and lower prices, but syndication and cartels have distorted the pricing mechanism.
In a truly free market, the invisible hand regulates prices. But the invisible hand is so invisible here that hoarders and speculators fix prices of essential commodities. What we need is the visible hand of a regulatory state. The government's hesitant move in intervening in the supply chain was long overdue, but not adequate.
But this is a country where gas stations go on strike when they aren't allowed to adulterate, or taxis protest when the authorities try to punish those who tamper with meters. This impunity exists because of a weak state. Raids on grain merchants and cooking gas dealers this week were half-hearted. No case has been filed in any court, probably because the government doesn't have anything to prove.
The price rise is completely manipulated by supply cartels. One way to counter that is to revitalise the public distribution system and ensure supply of goods at fair prices through cooperative outlets. Ensuing competition will force hoarders to bring out their stocks.
The devastating drought and the delayed monsoon have ruined this year's harvest. Subsistence farmers, already teetering at the edge of hunger will be worst hit. Migration to India will surge. For the first time, Tarai districts are going to have a food deficit this year. This is going to put additional responsibility on the state and district authorities to ensure supplies at fair prices by controlling hoarding, price-fixing and cartelling.
Politics, already wobbly, is going to be dangerously destabilised by food shortages in the coming months. The government needs contingency plans right away if it wants to prevent political repercussions and social unrest when the focus should be on the new constitution and protecting the peace process.
Businesses and corrupt government are often found to be hand-in-glove. They need to work hand in hand. A fair market has better chances of remaining free.
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