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06/01/2022 - Economy

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January 06, 2022

The Centre regulating direct selling under consumer protection act is welcome step for a healthy economy. Discuss (200 Words)

Refer - Business Line

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IAS Parliament 14 days

KEY POINTS

·        After seven years on the drawing board (the first inter-ministerial committee on this sat in 2014), the Centre has finally notified rules for direct selling under the Consumer Protection Act.

·        The rules completely ban pyramid and money circulation schemes, which masquerade as ‘direct selling’ but in reality have Ponzi elements, is quite welcome.

·        While there is nothing wrong with consumer firms choosing a direct-to-consumer model that disintermediates the distribution chain.

·        It also  saves them advertising costs and allows for more affordable pricing, this model assumes discomfiting characteristics when it acquires a pyramid character.

·        Unlike a simple direct selling model where a consumer firm directly recruits sales agents to engage in door-to-door selling and takes responsibility for their pitches, pyramid schemes.

·        Such MLM schemes have a reputation for luring unqualified recruits with promises of unrealistic ROIs and also hand consumers a raw deal.

·        While it is good to tighten the screws on a sector that is crying to be regulated, the process mustn’t make it difficult for genuine players who comply with the laws of the land.

·        Direct selling generated $179.3 billion in global retail sales and plays a key role in the health and well-being, beauty and household hygiene categories that have done exceedingly well during the pandemic.

 

Manish 18 days

Please Review !

IAS Parliament 18 days

Try to provide a comprehensive conclusion. Keep Writing.

K. V. A 19 days

Kindly review

IAS Parliament 18 days

Good attempt. Keep Writing.

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