Freedom, at a 'Price' - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Freedom, at a 'Price'

Mar 26, 2007

And we thought Dr. Singh with the help of Mr. Rao, had effectively negated much of the dreaded 'License Raj' in his earlier tryst with governance in the early nineties. Last week Friday, quite a few newspapers carried a picture of three very tense-looking Cement Manufacturers Association (CMA) office-bearers discussing strategy outside the hallowed portals of North Block, the seat of India's Ministry of Finance. With all this hoop-la about cement prices, one is pardoned if he believed cement prices to be the major culprit behind the current upsurge in the inflation rate as measured by the Wholesale Price Index (WPI). The truth is cement has a weight of 1.7% and has contributed just 4.5% of the total 4.9% increase in the WPI. Fruits and wheat have almost the same weight and similar shares in the total inflation, but we have yet to hear any pro-active measures undertaken by this government on their supply and pricing.

Dr. Singh's government is also going back on the earlier Congress government's initiative on the Drug Price Control Order (DPCO). Introduced in 1970, this draconian law brought pricing of 97% of drugs sold in India under price control of the central government. In 1995, the Rao government pared it down to 75 drugs accounting to 40% of the market. In FY02, they were to prune this list to 25 essential drugs. Instead we find Dr. Singh, alongwith his crew of ministers, is planning to extend the DPCO again to affect almost 80% of the medicines.

Will affordability increase the usage? The problem in India is less of affordability and more of accessibility. The government health care agencies are barely stocked with essential medicines, sometimes are non-existent. If this government is intent on going back on its earlier resolve, it raises serious doubts about the credibility of the reform process itself, driving out future investments.

Also the moral thread running through the price-fixing attitude of the government provides some food for thought. With more than 41% of the population now below the age of 25 years, a majority of Indians today have not been through the most repressive decade of India's economic history, the fruits of whose labour we still find fettering us. Apart from bank nationalisation, some of the most ghastly economic laws - the MRTP Act, Small Scale Reservation Act, FERA, Amended Industrial Disputes Act to finally apply it to many more units, Urban Land Ceiling Act, DPCO, quantitative and tariff curbs on imports - all happened during this period.

Besides preferential policies many times more comprehensive and detailed than similar US affirmative action programs, social policies have included labour market and employment policies, government control over the broadcast media, and socialistic educational and housing programs. These have gone hand-in-hand with the unrestrained growth of a bureaucratic, re-distributive state.

A point to ponder about is that after the partial steps taken in the early 1990s towards a pre-1969 India, by dismantling most of Ms. Gandhi's economic legacy, the levels of competition have dramatically improved. By paring the role of its government, India is steps closer to a meritocratic society. Today, a person from India's remote corners can trade on the stock exchanges, access the Internet, talk over his cell phone if not the landline! We can see the burgeoning of growth from the staid 'Hindu' rate of 3.5% (enough for sustaining the increased population) to a new trend of 7% plus. As a result, the secessionist demands of various fragmented groups have reduced. India is looking much stronger than it ever did since 1967.

We cannot afford to go up the 'socialist' path again. All these 'pricing' theories are best left to the markets.

Equitymaster requests your view! Post a comment on "Freedom, at a 'Price'". Click here!


More Views on News

BSE Sensex Surges 707 Points; BHARTI AIRTEL Among Top Gainers (Market Updates)

Sep 25, 2020 | Updated on Sep 25, 2020

The BSE Sensex Surged 707 Points; BHARTI AIRTEL Among Top Gainers. Find the latest update, special reports and news on all time high gainers of BSE Sensex at

It's When You Sell that Counts (Profit Hunter)

Sep 25, 2020

How I alerted readers to the impending crash last week.

Can the Nifty Fall to 10,200? (Fast Profits Daily)

Sep 24, 2020

The Nifty has reached an important support level today. If it breaks then we could see further downside.

How to Save Money by Exiting Stocks Before They Fall podcast (Views On News)

Sep 24, 2020

A penny saved is a penny earned. It doesn't matter where you enter. All that matter is where you exit. Watch this video to identify an opportune time to exit your investments and book profits.

ICICI Prudential ESG Fund: Aims for Sustainability (Outside View)

Sep 24, 2020

PersonalFN briefly explains the newly launched fund : ICICI Prudential ESG Fund.

More Views on News

Most Popular

Why We Picked This Small-cap Stock for Our Hidden Treasure Subscribers (Profit Hunter)

Sep 17, 2020

This leading household brand will profit big time in a post covid world.

My Top Stock to Buy in this Market Selloff (Profit Hunter)

Sep 22, 2020

The recent correction offers a great opportunity to buy this high conviction smallcap stock.

What Do the Charts Say About Buying Smallcaps Now? (Fast Profits Daily)

Sep 18, 2020

Everyone seems to be excited about buying smallcaps now...but is it the right thing to do? What do the charts tell us? Find out in this video...

How Much Money Do You Need to Be a Professional Trader? (Fast Profits Daily)

Sep 17, 2020

In this video I'll answer a question I get asked often: How much capital do I really need to trade the markets for a living? Let's find out...


Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms


Sep 25, 2020 03:16 PM