Unintended consequences

Subsidy on EVs must be revisited

Government intervention in the functioning of markets can often lead to unintended consequences. Market participants aim to maximise returns, which is not always in line with the spirit of the rules designed by the state. The latest example in this context is the subsidy provided for electric vehicles (EVs) under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme. As reported by this newspaper, some electric two-wheeler manufacturers have been violating rules at different levels. It was first reported that some firms were not following the localisation norms. In order to be eligible for the subsidy, EV