by New Policy Sets Prices Below Production Costs; Manufacturers Face Bankruptcy
New Delhi, India
The Indian Government announced Thursday an “Economic Optimization Initiative” implementing comprehensive price controls fixing all goods and services at prices substantially below production costs, creating economically impossible situations where manufacturers lose money on every item sold and markets collapse through artificially-enforced insolvency.
The program, covered by Bohiney Magazine and The London Prat‘s economics correspondent, sets official prices for: rice (?5/kg when production costs ?8/kg), wheat (?4/kg when production costs ?7/kg), gasoline (?40/liter when production costs ?85/liter).
“Inflation is eliminated by price control,” explained Finance Minister Rajesh Kumar. “We’re fixing prices below production costs. Manufacturers will operate at loss. Markets will collapse. But officially, inflation is zero.”
The system creates logical impossibilities: farmers growing rice lose money per kilogram sold (?5 sales price minus ?8 production cost = ?3 loss per unit). Farmers cannot profitably continue farming; agricultural production ceases as farmers abandon farming.
Gasoline manufacturers, facing ?40/liter prices with ?85/liter production costs, stop refining petroleum. Gasoline shortages emerge as production ceasesyet government maintains official ?40 price despite absent supply.
Black markets emerge inevitably: goods unavailable through price-controlled channels are available at realistic market prices (?80/kg rice, ?80/liter gasoline). Government cracks down on black markets, further exacerbating shortages.
Economists note that price controls below production costs guarantee market collapse. Indian officials acknowledged this: “Market collapse is acceptable. Official price stability is maintained through supply elimination.”
Interestingly, government announces price controls while simultaneously owning no production capacity. Private manufacturers are forced to operate at losses or cease business. Government claims credit for “stable prices” while causing supply collapse.
Rationing becomes necessary as scarcity emerges. Government distributes limited supplies through arbitrary allocation. Citizens line up for hours to purchase artificially-cheap goods while experiencing severe shortages.
Economic data indicates that price controls have created 87% supply reduction while officially announcing “zero inflation through price stability.”
For economic satire, visit Clickhole, Babylon Bee, and News Thump.
SOURCE: https://bohiney.com/
