2011 (August)
Paper: 101
Full Marks: 80
Time: 3 hours
Answer all questions. The
questions are of equal value.
1.
(a) Highlight the relevance of government and
business.
Or
(b) Highlight the
relevance of foreign investment and India.
2.
(a) Are controls under planning in India
effective? Justify.
Or
(b) Draw out the differences
between restrictive trade practices and unfair trade practices under MRTP Act.
(THIS ACT IS NOW ABOLISHED SO NO QUESTION EXPECTED)
Ans:
Monopolistic Trade Practices (MTP’S):
A monopolistic trade
practice is essentially a trade practice which represents the abuse of the
market power in the production or marketing of goods, or in the provision of
services, by charging unreasonably high prices, preventing or reducing
competition, limiting technical development, deteriorating product quality, or
by adopting unfair or deceptive practices. Two tests will determine whether a
trade practice is an MTP or not:
i)
abuse of market power, and
ii)
Unreasonableness in any practice.
Thus, the following are
MTPs:
1.
Maintaining the prices of goods or charges for
any services at an unreasonable level.
2.
Limiting technical development or capital
investment to the common detriment.
3.
Unreasonably preventing or lessening
competition.
4.
Allowing quality of goods produced, supplied or
distributed or any service rendered to deteriorate.
5.
Increasing unreasonably the cost of production
of any goods or charges for provision or maintenance of services.
6.
Increasing unreasonably the selling price of
goods, or charges at which the services may be provided.
7.
Increasing unreasonably the profits that are
derived from the production, supply or distribution of any goods or the provision
of any services.
8.
Preventing or lessening competition in the
production, supply or distribution of any goods or in the provision or
maintenance of any services by adopting unfair methods of unfair practices.
Restrictive Trade Practices (RTP):
A trade practice which
restricts or reduces competition may be termed as restrictive trade practice.
The following are the RTPs as described by section 33(1) of the MRTP Act:
(a) Refusal to deal with
persons or classes of persons: Any agreement which restricts or it likely to
restrict by any methods, the persons or classes of persons to whom goods are
sold or from whom goods are bought.
(b) Tie-in sales or full
line forcing: Any agreement requiring purchaser of goods, as a condition of
such purchase, to purchase some other goods.
(c) Exclusive dealing
agreement: Any agreement restricting in any manner the purchaser in the course
of his trade from acquiring or otherwise dealing in any goods other than those
of seller or any other goods.
(d) Collective price
fixation and tendering: Any agreement to purchase or sell goods or to tender
for the sale or purchase of goods only at prices or terms and conditions agreed
upon between the sellers or purchaser.
(e) Discriminatory
Dealings : Any agreement to grant or allow concession or benefits, including
allowances, discounts, rebate or credit, in connection with or by reason of
dealings.
(f) Re-sale price
maintenance: Any agreement to sell goods on condition that the prices to be
charged on resale by the purchaser shall be the prices stipulated by the seller
unless it is clearly stated that prices lower than those prices may be charged.
(g) Restriction on output
or supply of goods: Exclusive distributorship, territorial restriction and
market sharing.
(h) Control of
manufacturing process.
(i) Price control
arrangements.
(j) Governmental
recognition of practice as restriction.
(k) Residual restriction
trade practices: Any agreement to enforce the carrying out of any such
agreement as is referred to in the foregoing classes.
Differences
between MTPs and RTPs
MTP’s
|
RTP’s
|
1. Market
power is sought to be misused. Stress
is on abusing market power.
|
1. Competition
is sought to be curbed. Stress is on preventing competition from its free
play.
|
2. Commission
can conduct enquiry on either reference from the Central Government, or on
its own knowledge or information.
|
2. Commission
can conduct enquiry on any of five bases :
a)
a complaint from 25 or more consumers or
dealers,
b) reference
from Central Government,
c) reference
from the State Government,
d) the
application of the Director General or
e) On
its own knowledge of information.
|
3. Commission’s
role is advisory. It can only conduct enquiry.
|
3. Commission
has the power of passing final order which is subject to appeal only to
Supreme Court.
|
4. Commission
submits report about the findings to the Central Government. The power of
making final order rests with the Central Government.
|
4. Commission
itself can pass final order after enquiry.
|
5. Agreements
relating to MTPs need not be registered.
|
5. All
agreements relating to specified restrictive trade practices are required to
be furnished for registration to the Director-General.
|
6. Consequences
of indulging in an MTP are more serious. Apart from the order to prohibit the
person concerned from indulging in an MTP the Central Govt is empowered to
pass orders to remedy or prevent any mischief resulting from the practice.
|
6. Consequences
of indulging in an RTP are not very serious. A cease and desist order is
passed and he relevant clauses of the RTP agreement are declared void.
|
3.
(a) Critically evaluate the price policy in
India.
Or
(b) Critically evaluate the monetary policy
in the India context.
Ans: Monetary
Policy: Monetary policy
refers to policy formulated and implemented for achieving the following
objectives:
a)
Regulating the supply of money including credit
money and adjusting it to the needs of the economy
b)
To control the cost of money by regulating the
rates of interest.
c)
Directing the supply of money to the required
channels in accordance with the plan of priorities prepared by the planning
authority.
According to A.G. Hart "A policy which influences the public stock of money
substitute of public demand for such assets of both that is policy which
influences public liquidity position is known as a monetary policy."
From the above discussion, it is clear
that a monetary policy is related to the availability and cost of money supply
in the economy in order to attain certain broad objectives.
Importance of monetary policy
A modern economy is a money economy. All transactions
are effected with the help of and through the medium of money. The prices of
goods, services and factors are fixed in terms of money. People earn their
income in the form of money and spend it in the form of money. So the supply of
money creates money income in the hands of the community and expenditure of money generates the demand for
different goods and services.
The monetary authority has to maintain
a perfect balance between increase in the production of goods and services and
increase in the supply of money. If increase in the supply of money exceeds
increase in the production of goods and services the result is inflation. On
the other hand, if the production of goods and services increases at a fast
rate and the supply of money increases at a slow rate the result is recession
and maybe depression. Hence the monetary authority has to monitor the growth in
production very closely and adjust the money supply to it.
In India the monetary policy is
formulated and implemented by the Reserve Bank of India which is an autonomous
financial institution. It is expected that the RBI would use professional
expertise to control the supply of money to the benefit of the community.
Obstacles In Implementation of Monetary Policy
Through the monetary policy is useful
in attaining many goals of economic policy, it is not free from certain
limitations. Its scope is limited by certain peculiarities, in developing
countries such as India. Some of the important limitations of the monetary
policy are given below.
a)
There exists a
Non-Monetized Sector: In many developing countries, there is an existence of
non-monetized economy in large extent. People live in rural areas where many of
the transactions are of the barter type and not monetary type. Similarly, due
to non-monetized sector the progress of commercial banks is not up to the mark.
This creates a major bottleneck in the implementation of the monetary policy.
b)
Excess
Non-Banking Financial Institutions (NBFI): As the economy launch itself into a
higher orbit of economic growth and development, the financial sector comes up
with great speed. As a result many Non-Banking Financial Institutions (NBFIs)
come up. These NBFIs also provide credit in the economy. However, the NBFIs do
not come under the purview of a monetary policy and thus nullify the effect of
a monetary policy.
c)
Existence of
Unorganized Financial Markets: The
financial markets help in implementing the monetary policy. In many developing
countries the financial markets especially the money markets are of an
unorganized nature and in backward conditions. In many places people like money
lenders, traders, and businessman actively take part in money lending. But
unfortunately they do not come under the purview of a monetary policy and
creates hurdle in the success of a monetary policy.
d)
Higher Liquidity
Hinders Monetary Policy: In rapidly growing economy the deposit base of many
commercial banks is expanded. This creates excess liquidity in the system.
Under this circumstances even if the monetary policy increases the CRR or SLR,
it dose not deter commercial banks from credit creation. So the existence of
excess liquidity due to high deposit base is a hindrance in the way of
successful monetary policy.
e)
Money not
appearing in an Economy: Large percentage of money never comes in the
mainstream economy. Rich people, traders, businessmen and other people prefer
to spend rather than to deposit money in the bank. This shadow money is used
for buying precious metals like gold, silver, ornaments, and land and in speculation.
This type of lavish spending give rise to inflationary trend in mainstream
economy and the monetary policy fails to control it.
f)
Time Lag Affects
Success of Monetary Policy: The success of the monetary policy depends on
timely implementation of it. However, in many cases unnecessary delay is found
in implementation of the monetary policy. Or many times timely directives are
not issued by the central bank, then the impact of the monetary policy is wiped
out.
g)
Monetary &
Fiscal Policy Lacks Coordination: In order to attain a maximum of the above
objectives it is unnecessary that both the fiscal and monetary policies should
go hand in hand. As both these policies are prepared and implemented by two
different authorities, there is a possibility of non-coordination between these
two policies. This can harm the interest of the overall economic policy.
These are major obstacles in
implementation of monetary policy. If these factors are controlled or kept
within limit, then the monetary policy can give expected results. Thus though
the monetary policy suffers from these limitations, still it has an immense
significance in influencing the process of economic growth and development.
4. (a) Elucidate
the redressal machinery under the consumer protection act.
Ans: ESTABLISHMENT
OF CONSUMER DISPUTES REDRESSAL AGENCIES
The following agencies established under the Consumer Protection Act
for the redressal of consumers disputes:
a)
A
District Consumer Disputes Redressal Forum to be known as the "District
Forum" established by the State Government in each district of the
State by notification. The State Government may, if it deems fit, establish
more than one District Forum in a district;
b)
A
State Consumer Disputes Redressal Commission to be known as the "State
Commission" established by the State Government in the State by
notification; and
c)
A
National Consumer Disputes Redressal Commission established by the Central
Government by notification.
1.
The District Consumer Protection Council At the lowest level are the
District Forums and these are established in each District and have
jurisdiction to entertain complaints where the value of goods or services and
the compensation if any, claimed does not exceed Rs.20,00,000 (TWENTY LAKHS), and
a complaint can be filed in a District Forum within the local limits of which
a)
The opposite party resides or
b)
Carries on his business or works for gain or
c)
Where the cause of action arises.
Membership: The District Consumer Protection Council
(hereinafter referred to as the District Council) shall consist of the
following members:
a)
The
collector of the district (by whatever name called) who shall be its Chairman;
and
b)
Such
number of other official and non-official members representing such interest as
maybe described by the state government.
Objects of the District
Council: The Objects of
every District Council shall be to promote and protect within the district the
rights of consumers laid down in the clause (a) to (f) of Section 6 (National
Consumer Protection Council)
2. The State Consumer Protection Councils: The State Consumer Disputes Redress
Commission is established in each state and these have jurisdiction to
entertain complaints where the value of goods or services and the compensation
if any, claimed exceeds Rs.20,00,000 (TWENTY LAKHS) but does not exceed
Rs.1,00,00,000 (ONE CRORE).
Membership:
a)
The
Minister in-charge of consumer affairs in the State Government who shall be its
Chairman;
b)
Such
number of other official or non-official members representing such interests as
may be prescribed by the State Government.
Objects of state council: The objects of every State Council shall
be to promote and protect within the State the rights of the consumers laid
down in clauses (a) to (f) of section 6. (Objects of National Council)
3.
The Central Consumer Protection Council: The Central Government may,
by notification, establish with effect from such date as it may specify in such
notification, a council to be known as the Central Consumer Protection Council
(hereinafter referred to as the Central Council). The National Consumer Disputes Redressal Commission has jurisdiction
to entertain complaints where the value of the goods or services and
compensation if any claimed exceeds Rs.1,00,00,000 (ONE CRORE)
Membership:
a)
The
Minister in charge of consumer affairs in the Central Government, who shall be
its Chairman, and
b)
Such
number of other official or non-official members representing such interests as
may be prescribed.
Objects of the Central
Council
The objects of the Central Council shall be to promote and protect the
rights of the consumers such as-
a)
The
right to be protected against the marketing of goods 2[and services]
which are hazardous to life and property;
b)
The
right to be informed about the quality, quantity, potency, purity, standard and
price of goods 1[or services, as the case may be], so as to
protect the consumer against unfair trade practices;
c)
The
right to be assured, wherever possible, access to a variety of goods and
services at competitive prices;
d)
The right
to be heard and to be assured that consumers' interests will receive due
consideration at appropriate forums;
e)
The
right to seek redressal against unfair trade practices 1[or
restrictive trade practices] or unscrupulous exploitation of consumers; and
f)
The
right to consumer education.
Or
(b) Elucidate the
role of institutional investors in Indian capital market.
5.
(a) How far have structural reforms made an
impact on reducing poverty and provision for food security?
Or
(b) How far has
IT Revolution opened up Indian economy?
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