Thursday, December 29, 2005

Salt for the Soul!

On a quirk, I had been looking at the economics of salt markets (in fact, a $7 billion market), and an interesting question emerged for libertarians and those interested in the economics of micromarkets.

Deficiency of iodine leads to serious disorders. And common salt is identified as a very good vehicle for iodine. For customers it is difficult to distinguish between iodised and non-iodised salt. Most poor may not even have information about the benefits of iodised salt. Yes, production of iodised salt does make it costlier but the difference is say, maybe about Rs 4/kg. Should the state legislate a ban against the sale of common salt for human consumption? A qualifier: the ban is not simply against sale of common salt but only in the context of human consumption. Some states of India do have this ban like Tamil Nadu (as far as my limited memory serves me). But if one does legislate a ban, what is the guarantee that it will be implemented well? Does subsidised iodised salt, sold through PDS shops achieve the objective?

It is probably because of this that Chine still has a stranglehold on its salt market. Read here. India, in contrast has through amendments to the Central Excise and Salt Act, 1944 in 1996, and and salt Cess Rules, 1964 in 2001 apparently de-licensed the salt industry. It is now the third largest salt producing country in the world after the US and China.

The market for salt (the regulations and the business aspects) in India is again on my would-love-to-research list. It would be exhilarating following the path through its production, marketing and consumption. Now here is a micro-market waiting to be researched!

Back to the Top

Back to the Top