< Previous | Contents | Next >
The rulers of the Delhi sultanate didn’t understand formal macroeconomics. But they knew one lesson very clearly—it was important to “signal the government’s intent to keep expectations in check”. Alauddin Khilji personally inspected markets and it worked—checking prices from rising. Such an effect on market is popular in India as the ‘Khilji Effect’.
India saw these time-tested lessons followed by the GoI in 2014–15— Central Ministers publicly stated that matters are under control with sufficient quantity of ‘onions’ and ‘potatoes’. The Government brought these two commodities under the purview of the Essential Commodities Act, too. This did show the ‘strong intent’ of the government to control prices.
Though, the routine statements claiming that ‘prices will rise’ often started the inflationary spiral (it was repeatedly done by the then Union Minister of Agriculture).