Administered prices

Administered Prises

1. ADMINISTERED PRICES Administered prices are described as those prices which are arbitrarily fixed by government. They are the result of government control and intervention in the market.

2. CHARACTERISTICS OF ADMINISTERED PRICES 1) They are fixed by the government. 2) They are statutory in nature. 3) They are regulatory in nature. 4) They are corrective measures. 5) They are a part of the pricing policy of the government.

3. OBJECTIVES OF ADMINISTERED PRICES 1) To provide certain basic necessaries of life at least a minimum quantity to economically weaker section and other poorer section of the society through public distribution system and to protect the interest of them against h igh prices. 2) To curb or encourage the consumption of certain items. 3) To maintain the price of essential raw materials so as to avoid cost and price escalation especially during the period of shortage and rising prices.

4. 4) To ensure the right kind of allocation of input resources among different users. 5) To contain inflation and ensure price stability. 6) To counter stagflation and consequent recession, they are used by the government. 7) To mobilize revenue for the government. 8) To improve the living standards of the masses and promote their economic welfare. 9) To ensure equitable distribution of certain goods which are scarce in supply. 10) To achieve macroeconomic goals like welfare, equity justice and stability etc…

5. NEEDS FOR ADMINISTERED PRICES 1) To correct imperfections in price mechanism in a free enterprise economy. 2) To prevent price escalation of essential commodities when their supply falls short of demand. 3) To protect the interest of consumer against profit-greedy monopolists. 4) To provide necessaries of life at least in minimum quantities at fair prices to poorer sections of the society.