Maximum Retail Price

Tuesday, July 14, 2015 Life

When the 'maximum' in MRP is not really enough

Exchange of goods had been a problem since the birth of man. The early men fought for goods until barter system was introduced. The smooth reciprocity seemed working until a certain group of people felt it is unfair to trade wheat for diamonds. Rather, the business took time as they had to find another person who needs what we have and also he should have what we need. In order to make a fair and decent business, Chinese started using actual weapons and tools as the medium of exchange. When people started using the already received tools to fight for the goods and not exchange those, coins came into existence. Although China was the first country to use recognizable coins, the first minted coins were created not too far away in Lydia (now western Turkey). Lydia, with a strong trade economy, could not escape from the Persian army. Chinese had then started moving from coins to paper all in search for a fair and comprehensive exchange. The currency has now shifted to paper with or without a historic image in it. Do you think the exchange is fair now?


Under the Weights and Measures (Packaged Commodities) Rules, all packed goods should carry certain essential information on the contents of the package, such as its weight or volume, the name and address of the manufacturer, the date of manufacture, and in case of food packages, the best before date and, of course, the maximum retail price (MRP). The Government of India has implemented rules Under the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006 for ensuring the fair transaction between a consumer and a retailer but what happens in India is ridiculous.

There isn’t a shop in Erode, Tamil Nadu that sells chilled mineral water bottle at MRP. The consumer has to pay an additional two rupees for the electricity used to run the refrigerator. The story is not different in other places too. If the consumer questions the additional price, the shopkeeper shouts at the consumer and make him pay it. It was surprising to know that the label in the bottle itself said it had to be stored in cool places and is best when served chilled.


There was a recent incident where a consumer had to pay Rs.20 extra for a product than what was printed as MRP. When the consumer questioned it, the shopkeeper claimed that was the old price and has changed the previous day. Some retailers increase the price when the diesel price hikes. For the same product, the rate of tax the retailers claim was found to be quite varying. If this is the case, what is the role of government in deciding the MRP of a product? If the shopkeeper varies the price according to the change in diesel price or varying demands, sadly, it has to be said that the Ministry of Civil Supplies is a puppet at the hands of brands. Is there any government agency that decides the price of a product? Unfortunately, No! As long as the tax is being paid, no one even cares how much you pay.

The price of a product is completely decided by the manufacturer and there is no interference by the government agencies. With the recent high levels of inflation, many manufacturers are reducing their pack sizes (weight or volume), while keeping the MRP and the "physical size/appearance" of the pack as same. It is difficult to recognize when the weight of a milk powder pack is reduced from 750 grams to 640 grams keeping the size of the pack, its appearance and the price same. The consumers barely see a difference. It is not digestible to know that we are paying much more than what should be.


The same mineral water bottle available in a local store for twenty rupees is not available for the same price in a cinema multiplex. The price is more than double. Whatever you buy from inside a multiplex cinema, be sure that you have double the cash that you would ever expect. Anyway, the cinema staff does not seem cheating because they ask only for the MRP printed on the products. So the manufacturer decides the price at which their product is to be sold at different places. Oh Yes! The cinemas have to pay extra rent, keeps everything clean, have more staff and, of course, they need profit. Don’t you think the ticket price at multiplexes is far more than at a normal theatre? Wouldn’t that be enough to pay the rent, pay the staff and make a profit out of it?

There is a clever way of marking the price and that ends with 99. The consumer gets a feeling that the price seems lower. Psychologists commented that normal people find Rs.999 very low compared to Rs.1000. The consumers are tricked by the manufactures where the buyer concentrates on the first digits and feels relaxed on the price. There is nothing crooked in it until you realize you often tend to relax on the one rupee balance. It is observed that almost 85% of the consumers do not wait to get the one rupee from the cashier. A study has shown this one rupee from each customer from each store all across the country amounts to a huge number and is non-taxable. This is Black Money!


When there are rules and regulations for packaged goods, there is a section that lacks any interest in law or Acts. These are unpacked foods and commodities. The only regulation the government has put forward is to display the price of items in a rate board or menu whichever is applicable. When the smaller hotels and restaurants follow the rule, multi-national companies like KFC and McDonald’s do not seem to have the courage to do so. What you see in the rate boards or menu cards is just not true. The consumer has to pay around Rs.185 for a combo meal which is printed Rs.151 at McDonald’s. These companies are just not ready to display the full price of a product. Only when we pull out our wallet to pay the bill would we know the price we calculated was without the service tax and all other taxes. Why should the customer take a calculator and do the computations at a food store? Why can’t they just show the full price? The story takes no deviation when it comes to an Internet plan or a postpaid mobile connection. The basic right of a citizen to know how much he pays is denied. There is a plan proposed by the Government of Kerala to rate the hotels with respect to the amenities they provide and fix a standard rate for the same item in all hotels under same rating. At least they are thinking!


There was a time when the subject had to pay what the King decides. ‘Customer is No King’.


written by
Ajay Peter