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Tuesday, May 6, 2014

MRP ... MSP .... law of demand and supply ~ and fact of consumer taken for a ride !

Some of my friends criticize me for posting too many on Cricket – some come naturally ….the connection in this post too !!  We go to supermarkets – do some fancy shopping – pay by credit card, without caring to check what was bought, at what rates – and how much they are billed !  - prudent people would sure check the price before buying and ensure that they pay only that much !!

In Economics – there is the law of Supply and demand….it is not actual law, but more of a theory of understood realization on how the market behaves based on demand and supply.  The  unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium for price and quantity.

Those of us watching IPL – know this well – the Quikr advt .. ‘MSP’ ~ the maximum selling price ! …..  Quikr, the classified online market place launched – MSP (Maximum Sales Price) that helps sellers determine a reasonably accurate value for their used goods before posting an ad for these items on The MSP model will help buyers understand if they are getting a fair price for the used products that they wish to purchase.  The company claimed that this is the first pricing guide in the country for pre-owned goods. The optimum price range for comprehensive variety of used items can be determined by using the MSP calculator on Quikr's website and mobile site. Users can ascertain the best possible price range for their used goods.  The calculator is currently live on Quikr's website and mobile site, and works using special algorithms designed by the company.

We buy more  !!  ~ all packaged goods in India, ranging from beverages to mobile phones to cosmetics, are stamped with a price dictated by the manufacturer as being the maximum allowable cost to the consumer.  ~ it is MRP (Maximum Retail Price) adapted in 1990 – prior to which prices used to be indicated either as Retail price + local taxes extra or MRP – inclusive of all taxes.  Everytime you bought, you had apprehension of paying more.  Some traders were fleecing in the garb of local taxes, though such taxes never enriched Govt’s coffers.  The change was brought about by the Department of Legal Metrology to the Standards of Weights & Measures Act (Packaged Commodities’ Rules).  Now theoretically, one can check the MRP on products before purchasing – of course, this will not apply when sold in loose – unpacked. There have been cases where merchants still sell more than printed MRP stating that prices have since been revised.  

Often we read that one can file a complaint with the District Forum when if you feel you have been over-charged. The person on whom complaint is made has 30 days to file their version of events and can even extend this for an additional 15 day period.  Historically, the prices of consumer goods traded in the markets are settled arbitrarily by the manufacturers and  consumers are compelled to purchase goods at higher costs. Under the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006, certain guidelines has been provided so that the consumer can not charged over to the maximum price printed on the goods by the manufacturer…  when your neighbourhood stores ruled the roost, there were always stores which sold lower than MRP – still maintained quality and made profits too… now in super market swarm, you get carried away by the way they are displayed rather than the price or any other trait of the product.

A recent report in TOI mentioned of a shop in airport being fined 50 lakhs for charging Rs.75/- above MRP.   Here is  the same reproduced :  That October morning in 2009, a vendor at the city airport decided to make an extra 75. Five years later, he may be poorer by 50 lakh.  Charging a customer double for an energy drink has attracted strong censure from the National Consumer Disputes Redressal Commission (NCDRC) and a fine of 50 lakh for the vendor — Snack Bar, a unit of Saptagiri Restaurant.

NCDRC lambasted Snack Bar for having collected 150 for a can of Red Bull from Delhi resident D K Chopra, while the retail price was 75. It also came down heavily on airport authorities, who it said were “working in cahoots” with stall owners to obtain higher rates for licences. The commission directed the stall owner to also pay 10,000 to Chopra. Chopra bought the drink at the airport in October 2009. Unhappy over being charged almost double, he issued a legal notice, but the stall-owner did not reply. Chopra then moved the District Consumer Disputes Redressal Forum for a compensation of 2 lakh for “harassment and mental agony,” and 11,000 as “travel and legal expenses.” But the forum dismissed his complaint.   Chopra then filed a first appeal in the State Consumer Disputes Redressal Commission. This too was dismissed on the grounds that he had failed to prove the MRP of the product. AAI can’t disturb MRP rates, says consumer panel…….. undeterred, he submitted two receipts for purchasing the drinks, which were not signed by the owner. Then he approached the NCDRC. Counsel for Snack Bar said they were entitled to collect twice the MRP and submitted a letter from the DGM Comml at Chennai International airport which mentioned the price of “imported juice/ energy drink” as 140.

Questioning the logic of its classification as a juice, it said “By no stretch of imagination RedBull can be called an imported juice energy drink... Such a price list can be created any time and has exiguous value,” said the commission. It said the letter did not have endorsement from the Airports Authority of India. “Even if it is assumed that AAI had given permission, they are not empowered to do so. Stating a snack joint was “like a tea/ beedi stall,” it said a person could not be forced to pay the prices which have been prescribedfor restaurants. “The stall owner has no right to misappropriate public money. It should go back to the public.” said the commission, adding the vendor might have been charging above the MRP before 2009 and would have earned “crores of rupees.” It directed the vendor to deposit the fine in the consumer welfare fund under the ministry of consumer affairs.

……………….. certainly good news for the consumers…… but is that shop alone ~ how many times the common man has been forced to buy products are much more than MRP..  you travel in buses – buy any brand of water – a much higher price stating that it is being sold ‘cold’……… you go to any cinema theatre – you may a startling higher price for same Pepsi / Coke  or any other brand …. Most restaurants charge you higher price for bottled drinks …. Different hotels charging (fleecing) differently for fresh juices is understandable …. But why and how different rate for the bottled drink …. Perhaps this is similar in wine shops – on which I am not the person to comment ! …

photo of Chepauk taken by me ~
pepsi drinking girls - photo credit - BCCI

A couple of years back, I had  posted on the inconveniences caused to spectators at Chepauk stadium during IPL. Everything is banned – people are not allowed to carry water bottles even and literally have to buy things at astronomical prices fixed arbitrarily that too – not so qualitative products.   At the entrance not the police but self-appointed security who behave as though they are ‘black-cats in charge of the top most person of the country’ and once they say ‘not allowed’ – no further talks.  Even water (pet bottles) are not  allowed …. Illogical ! ‘everyone tries to make quick bucks as corn that costs Rs.10 outside gets sold for Rs.40 inside – nobody complains – anyway the prices of tickets have already touched the roof. Water in cups costs a fortune and they will ensure that water is scarce – so that you buy a cup of coke or other drink...... one need to see the state of temporary parking lots – where people pay Rs.100 for non-existent facilities and then rush towards the stadium.

It is around 8 pm now ~ I would be better off seeing today’s match rather than making this post.

With regards – S. Sampathkumar.

6th May 2014.

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