Deflating India’s COVID black market boom

Context:

With the second wave of infections and the rise in COVID-19 positive cases in India, the necessity for integral medicines, hospital beds and oxygen supplies has gone up incrementally. In such a situation, the boom in black-market sale of essential needs such as medicines and oxygen tanks has emerged as most reprehensible is the brazen attempt by profiteers in filling the supply gap following the desperation of many patients and families. 

Relevance:

GS-III: Indian Economy (Mobilization of Resources), GS-II: Polity and Governance (Important aspects of governance, Issues with transparency and accountability)

Mains Questions:

In the context of flourishing black markets during the Covid-19 pandemic, what are the existing provisions related to the control of such black-market networks? Suggest measures to handle black-market issues during such circumstances. (15 marks)

Dimensions of the Article:

1. What is a Black Market?
2. Flourishing black market during the Covid-19 pandemic
3. Reason: The Pressure
4. Legal regime in India to tackle Black Market (especially in wake of Covid-19)
5. Administrative Shortfall or Exceptional Circumstances?
6. Way Forward

What is a Black Market?

• A black market is an economic activity that takes place outside government-sanctioned channels. Black market transactions usually occur “under the table” to let participants avoid government price controls or taxes.
• The goods and services offered in a black market can be illegal, meaning their purchase and sale are prohibited by law, or they can be legal but transacted to avoid taxes.
• Traditionally, black market activity was conducted in cash, one of its defining aspects. This was done in order to avoid creating any paper trail. With the rise of the Internet, many black market transactions are now done online, such as on the dark web, and often conducted with digital currencies.
• Black markets can have a negative impact on the economy because the activity is not reported and taxes are not collected on the transactions.
• The black market’s many drawbacks include the risk of fraud, the possibility of violence, and being saddled with counterfeit goods or adulterated products, which is especially dangerous in the case of medications.
• Black markets do provide some benefits, such as creating jobs for those who may not be able to find employment in traditional markets and allowing access to medicine and healthcare to those individuals that might not have had access otherwise.
• Sometimes, a black market is the only choice for procuring goods in certain situations for certain people.

Flourishing black market during the Covid-19 pandemic

• The desperate need for vital medical supplies has forced many hapless citizens to pay more than the market price to procure these medicines.
• There are reports of many having been tricked into believing fire extinguishers to be oxygen cylinders and saline water bottles to be remdesivir vials after parting with huge sums of money.
• However, clamping down on these cases and the culprits is dependent on having an efficient multi-dimensional preventive model rather than a control mechanism that functions much after the damage has been already done.
• In India, the distribution of remdesivir in the States is mostly controlled by the local governments, while decisions about oxygen supplies to the States are predominantly decided by Union bodies. Yet, citizens have been approaching alien sources to procure medical supplies.

Examples

• In 2020 a racket of selling fake and spurious tocilizumab injections in Surat and Ahmedabad was unearthed by the Gujarat Food and Drugs Control Administration. Things do not seem to have improved even after a year in 2021.
• Recently, the police in Ahmedabad arrested a few people for preparing fake remdesivir vials for sale using a mixture of glucose and salt and affixing them with fake brand labels.
• In Mumbai’s drug black market, citizens have had to pay huge amounts ranging from 35,000 and 50,000 rupees for remdesivir vials.
• In Kanpur, Uttar Pradesh, a racket to market oxygen cylinders in the black market was uncovered after raids on a godown.

Reason: The Pressure

• A major reason behind why many are in the situation they are facing is because administrative organisations are being overwhelmed and helpline numbers inundated with calls and difficult to connect to.
• Even if citizens are fortunate enough to have their requests entered in records, they may not be able to procure the products they need due to the inadequacy of resources or probably not receiving a closure communication from helplines, which keeps them at a loose end without knowing where else to go and what else to do.
• This inaccessibility, a redundant and long communication process flow, and a delay in rendering responses are what have affected the reliability of these helplines as far as people are concerned.
• Any market, black or otherwise, is a dynamic hemisphere which is consumer-driven. There is public demand for what the products these black markets or rackets have to offer and which is why they thrive.
• Alleged hospital bed-booking scams, the unnecessary hoarding of COVID-19 essentials by the elite, and possible VIP culture practices have contributed to the erosion of trust.
• These elements have all combined to force the public to look elsewhere for sources beyond the probability of the government rendering them assistance.

Legal regime in India to tackle Black Market (especially in wake of Covid-19)

1. The Essential Commodities Act of 1955, is for the control of production, supply, and distribution of certain commodities. The Act does not deal with the term “black marketing” but section 7 prescribes for penalty on violation of government notification issued under section 3. Schedule to the Act includes “drugs” as essential commodity.
2. Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980, was enacted but did not provide for definition of black marketing. Section 3(1) provides that authorities have power to detain a person “with a view to preventing him from acting in any manner prejudicial to the maintenance of supplies of commodities essential to the community it is necessary so to do, make an order directing that such person be detained”.
3. The National Security Act of 1980 under Section 3(2) gives similar power to the Central Government or the State Government, if the act is in any manner prejudicial to the security of the State, apart from being prejudicial to the maintenance of Public order or to the maintenance of supplies and services essential to the community. The phrase “acting in any manner prejudicial to the maintenance of supplies of commodities essential to the community” has been addressed by the Supreme Court in several cases while deciding on the validity of detention orders passed under the Act.
4. In order to more effectively deal with persons indulging in hoarding and black-marketing and profiteering in essential commodities, the Central Government enacted the Essential Commodities (Special Provisions) Act, 1981. Special provisions by way of amendment to the principal Act were made for a temporary period providing summary trial of offences under the Essential Commodities Act, constitution of special courts, enhancement of sentence and making the offences as cognizable and non bailable and providing for stricter provisions for grant of bail.

Administrative Shortfall or Exceptional Circumstances?

• Despite a robust legal regime on paper, the Indian administration has struggled with the issue of “Hoarding” and “Black Marketing” since the pandemic has started, be it manufacture and sale of fake sanitizers and masks or scarce Medicines and Oxygen supplies.
• According to reports, over 300 FIRs have been registered alleging hoarding and black-marketing.
• While some gain traction in public discourse, other instances get lost in the myriad. However, it is a folly to think such instances are limited to India.
• As reported on Interpol’s website, under Operation Pangea XIII in March of 2020, counterfeit facemasks, substandard hand sanitizers and unauthorized antiviral medication were all seized, by the police, customs, and health regulatory authorities from 90 countries in a collective action against the illicit online sale of medicines and medical products. This exercise has resulted in over 120 arrests worldwide.

Way Forward

• Court directions such as the ones regarding the supply of Oxygen and more stringent laws and proactive approach at the central level towards curbing such unethical and illegal activities, is need of the hour.
• Appropriate orders/directions should be issued limiting MRP of all necessary medicines and equipment at the earliest possible.
• What is required is, for the government to deal with each of the issues at an individual level by issuing orders, circulars or notifications, even if time bound, to ensure that the prevalent law is appropriately enforced and wherever there exists a void in the price control mechanism, the same should be taken care of at the earliest.
• Apart from increasing the gulf between have and have nots, black marketing and hoarding are directly proportional to social loss and at a time of global pandemic it indirectly adds to emotional loss too.

-Source: The Hindu