5 min read.Updated: 19 Jan 2017, 05:28 AM ISTGeeta Gouri
The spike in onion prices in 2010 provides an example of the perils of opaque data in informal markets
Shifting markets from the informal sector to the formal sector has several advantages. Prompted by demonetisation and e-payments, the debate has veered to cashless mandis, with farmers remaining unpaid as traders hesitate to shift to e-payments. While it is well known that transactions, when conducted informally, keep activities out of the tax net, what is perhaps less known is the crucial role played by information in revealing the presence of cartels and of collusion which distorts the function of markets. The lack of critical information saw the attempt by the Competition Commission of India to break a cartel in the onion market reach a dead end. Insights gained from the case have convinced me about the need to hasten the process of modernization and formalization of payments. Digital payments force markets to modernize.
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