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Practice of Dual Pricing System

May 4, 2017 | Expert Insights

On the 3rd of May 2017, raids were conducted at various business premises in Karnataka for selling water bottles at exorbitant prices. Bottles priced at Rs 20 were sold at Rs 50/100.  The raid was conducted at 188 places in the State and the number of registered cases in 46. In Bangalore, it was conducted at various malls and multiplexes, such as Garuda, Gopalan, UB City, etc.

 Essential Commodities Act of 1995

The Essential Commodities Act of 1995 empowers the government to control production, supply and distribution of certain commodities in view of rising prices.  Petroleum, food items, fertilizers, jute and textiles are included under this Act.  However, water is not incorporated under it.

A business premise can be booked under the Standards of Weights and Measures Act 1977 if it does not comply with the Packaged Commodity Rules. A fine of Rs 2000 will be charged on first time offence, and an offence for the second time will be punished with imprisonment of six months. The retail price has to be mandatory displayed on all pre- packed goods and the importer cannot alter the price on the wrapper once printed.

Analysis

The reason claimed by the enterprises for the unreasonably high price is for the extra services given like Air Condition and because their overheads are high. The producers charge different MRP’s for identical products sold in open markets and in retail chains. Retail chains, airports, etc request for a high MRP to be printed so that they can levy discount on it to make the consumer psychologically happy. This practice is predominant at airports, malls, stadiums and other sister associations. 

Assessment

The government should take initiatives to ban this unfair trade practice of dual pricing system of packaged products. It should follow the principle of ‘One Product, One Price’. Government authorities should put up notices at airports and multiplexes to bring this to the consumer’s attention.

Consumers can send in their complaints to specified numbers for quick action on this case. However, the dual pricing system for grains, sugarcane and other similar commodities distributed under the public distribution system (PDS) should continue as it benefits the families living below the poverty line (BPL). States like Maharashtra and Rajasthan have abolished this practice; it’s time for Karnataka to take the lead.