Nepal's Market Crisis: Unchecked Price Hikes and Regulatory Failure

Kathmandu. Fruit markets are currently seeing exorbitant prices for bananas. In the valley's retail markets, ripe bananas are being sold for 350 to 400 rupees, while traders note that farmers receive only 60 to 80 rupees per dozen. While other fruits have also seen price increases, the surge in banana prices is considered unnatural.

Cooking gas remains difficult to find in the market. Consumers complain that when exchanging one cylinder for another, they are forced to pay arbitrary prices ranging from 500 to 1,000 rupees, whereas exchanges previously cost only 200 to 300 rupees.

Following the government's announcement of new rates, public transport fares have increased nationwide. However, there are widespread complaints of operators charging even higher than the mandated fares, often citing a lack of small change, with no monitoring or punitive actions taken.

These are just a few examples. The rise in petroleum prices has triggered a multidimensional inflationary impact on the market. While such inflation is not entirely unexpected given the global economic climate, there are countless instances of unnatural price hikes and black marketeering beyond these factors.

As prices soar, government bodies responsible for market control and regulation are evading their responsibilities by citing a lack of laws and authority. The Department of Commerce, Supplies and Consumer Protection is the primary regulatory body. While the department publishes reports on market monitoring, it has yet to take action against unnatural pricing, often using various excuses to avoid effective oversight.

Stakeholders suggest that the main reason for this negligence by monitoring mechanisms is the government's announcement to repeal various consumer protection laws.

Upon the formation of the current government, Finance Minister Swarnim Wagle announced the repeal of 15 laws. This process, recommended by the High-Level Economic Reform Suggestion Commission led by former Finance Minister Rameshwar Khanal, had previously been initiated by then-Finance Minister Bishnu Paudel in the budget for the current fiscal year.

Following this announcement, relevant agencies have ceased taking action under the Black Marketing Act. Before the rise in petroleum prices, there was little concern as price levels were stable. However, there is now a growing demand for action against the rise in black marketeering.

Roshan Gyawali, Director General of the Department, argues that since prices are determined by the open market, action cannot be taken solely based on high prices. He states that action can only be taken if prices exceed government-mandated rates for specific goods, but not in other circumstances.

Gyawali notes that monitoring for government-regulated items falls under the jurisdiction of the respective departments. 'It is the responsibility of the Department of Transport Management to oversee transport fare violations, and the Nepal Oil Corporation handles gas cylinder pricing,' says Gyawali. 'The agency responsible for regulation must also handle the monitoring.'

However, consumer rights activists argue that the existence of the Black Marketing Act should not prevent the government from monitoring and taking action, and that the Department of Commerce bears the primary responsibility. They assert that one agency should not shift blame to another and that the department must show initiative.

According to them, Article 44 of the Constitution of Nepal guarantees every consumer the right to receive quality goods and services, and the Department of Commerce has the primary duty to ensure its implementation.

'When setting prices for any goods or services, it must be fair,' says Timalsina. 'Even if the government does not need to set prices for every item, it must analyze, monitor, and take action based on whether the costs are justified; this is the job of the Department of Commerce.'

He argues that since the Consumer Protection Act designates the Director General of the Department of Commerce as the chief monitoring officer, and Assistant Chief District Officers and local administrative heads as deputy monitoring officers, the department must coordinate with all agencies to proceed with monitoring and enforcement.

He further states that Schedule-6 of the Constitution makes consumer protection a joint right of the federal, provincial, and local governments, meaning lower-tier governments should also enact laws to conduct investigations and take action.

Therefore, he concludes that authorities cannot evade responsibility by claiming a lack of laws or coordination. While there was a practice of inter-agency cooperation under the Joint Market Monitoring Guidelines in the past, he notes that monitoring has become ineffective due to a current lack of inter-agency coordination.