Once the federal government embraced the WTO, however, these quantitative restrictions began to fall away, and large quantities of foreign produce, grown with extensive subsidies from other governments, are now brought to India for sale. The cycle of woes is completed by yet another aspect of trade reform, which makes just as little sense as the first two. Regulations within the Essential Commodities Act kept a lid on the prices that could be charged for food products, and this maintained a balance between the procurement and sale processes, both of which included government participation. In the interest of deregulating trade in produce, however, portions of the ECA have been modified, with the result that price ceilings have been lifted. These processes combine to produce a devastating effect.
Traders buy at the most competitive rates, but are free to sell at unregulated high prices.
The expectation that competition among retailers will maintain price stability for the end-purchaser has simply not materialized, especially as produce is diverted to urban areas with higher purchasing power. Whether prices in the rural bazaars are held high by collusion or by improper infusion of competitive environments is debatable, with opinions running strong on both views. The World Trade Organization is allegedly erected in the interest of freer trade and better deals for consumers everywhere. If that is so, it is fair to judge the regime by its actual price effects. In this instance, if as a result of the WTO regime, rural consumers pay higher costs for goods and commodities than they did in its absence, it will be fair to say that the introduction of the WTO regulations is not achieving the intended purpose.