Consumer Affairs Secretary Nidhi Khare recently told the media that the National Consumer Helpline (NCH) has received nearly 3,000 complaints related to goods and services tax (GST) since the announcement of reduced tax rates. According to her, most of these complaints concern retailers and service providers who allegedly failed to pass on the benefit of lower GST to end consumers. The government has indicated that it is actively monitoring such practices to ensure that the intended relief from tax cuts does not remain on paper but reaches ordinary households. At first glance, this is a reasonable intervention by the government.

After all, the rationale behind reducing GST rates on certain products or services is to make them more affordable for consumers. If businesses pocket the difference instead of lowering prices, consumers lose out on the relief they are supposed to receive. Yet, while the intention may be laudable, the direction taken by the government reflects a worrying misplacement of priorities. The NCH was conceived as an institution to safeguard and advance the interests of consumers. It was not intended to function as an instrument of price policing or a quasi-regulatory body that monitors how companies adjust their pricing strategies in response to tax changes.

Consumer interests encompass more than the mere question of whether prices fall in line with tax cuts. What matters to consumers in the long run are the quality, safety, transparency, and reliability of the goods and services they purchase. Consumer protection, at its core, is about ensuring that individuals are not exploited by asymmetries of information, unfair trade practices, defective products, or poor service delivery. This includes problems like misleading advertising, adulterated food items, defective electronics, unfair contract terms in financial services, or arbitrary cancellation charges by travel platforms.

These are the kinds of issues that affect consumers in tangible and often distressing ways. Instead of focusing its institutional resources on such pressing matters, the NCH is currently preoccupied with investigating whether shopkeepers and service providers are passing on every rupee of GST reduction to their customers. This focus risks reducing consumer protection to a narrow exercise in price control—an approach that has historically produced poor results in India and elsewhere. Prices in a competitive economy are shaped by a range of factors, including input costs, supply chain dynamics, demand fluctuations, and brand positioning. Expecting a government body to micromanage pricing in real time is both impractical and undesirable.

This is not the first time India has grappled with the temptation to intervene directly in pricing under the guise of protecting consumers. When GST was rolled out in 2017, the government set up the National Anti-Profiteering Authority (NAA). The NAA was tasked with ensuring that companies passed on the benefits of lower tax rates or input tax credits to consumers.

While well-intentioned, the authority quickly came to be viewed as intrusive, arbitrary, and economically regressive. The eventual winding down of the NAA was, therefore, a welcome move. It signaled that the government understood the pitfalls of micromanaging markets in the name of consumer interest. It was also a good decision of the government not to resurrect the NAA to monitor GST 2.0. The government will do better to ensure that the NCH doesn’t transmogrify itself into an avatar of NAA.