NPPA caps of medical oxygen and oxygen cylinders In a massive setback for hoarders (those who stock up) and black marketers, the National Pharmaceutical Pricing Authority (NPPA) has capped the prices of medical oxygen and oxygen cylinders amid an increasing demand for them for coronavirus patients. The Ministry of Health and Family Welfare (MOH&FW) has directed the NPPA to take all necessary measures to immediately regulate the availability and pricing of LMO and medical oxygen in cylinder. "The present situation of COVID-19 has resulted in increased demand of Medical Oxygen (MO) in the country and hence its availability is of utmost importance. Many of the States/UTs are dependent on the medical oxygen supply from other States/UTs," a government press release said. Demand up, production and supply under pressure As per reports, the demand for medical oxygen has gone up almost four times, from 750 metric tonnes per day to 2,800 metric tonnes daily, causing a strain at all levels in the value chain of production and supply. Due to absence of price cap on liquid medical oxygen, manufacturers have hiked prices to fillers. Now, the NPPA has been asked to consider capping the ex-factory price of liquid oxygen in order to ensure its supply to fillers at reasonable prices. The government has also asked NPPA to consider a cap for ex-factory price of oxygen in cylinders in order to ensure supply of oxygen cylinders from filler at reasonable prices. "The government is committed to uninterrupted supply of Medical Oxygen especially in the times of pandemic. Oxygen Inhalation (Medicinal Gas) is a scheduled formulation, covered under the National List of Essential Medicines (NLEM)," the government statement read. During the pandemic, the supply of medical oxygen through cylinders has increased from 10% to around 50% of total consumption. "Price regulation at this end is imperative for continued availability of medical oxygen across the country," their statement says. Source: NPPA caps prices of medical oxygen and oxygen cylinders (livemint.com)

(i) What change do you see in the equilibrium price and quantity for oxygen in India during the COVID 19 pandemic?

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There exists a tradeoff between efficiency and equity Usually the equilibrium level of output and pr... View the full answer