The pillars of modern economy --liberalisation, privatisation and globalisation -- have come under sharp criticism from the Supreme Court which has favoured a relook into the functioning of free markets and suggested its regulation.
"Unregulated laissez faire free markets would only lead to massive market failures, even with respect to those aspects in which markets are supposed to function efficiently," a bench of Justices B Sudershan Reddy and S S Nijjar said.
"The falsity of the knee-jerk beliefs that markets are necessarily efficient, and will necessarily find optimal and just solutions for all problems, was again provided by the recent global financial crisis," the bench further said.
The apex court said that unthinking and extreme beliefs in liberalisation, privatisation and globalisation have led to many deleterious impacts globally which cannot be ignored.
"It is not a completely well accepted principle that liberalisation, privatisation and globalisation has led to the welfare or that it has been an unalloyed good of everyone," the court said.
It said the government needs to regulate free market, otherwise it would benefit only a few people leading to increased inequalities in the society.
"With respect to other social values and goals, it has also been shown that the complete evisceration of the power of the State to regulate the private sector would lead to massive redistributions of incomes, assets and resources in favour of the few, as against the multitude, thereby generating even greater inequalities.
"This would also suppress the ability of the State to exercise moral authority, and force, to keep competing interests, spread across groups, regions, and classes, from degenerating into a war of all against all," the apex court said.
The court passed the order while quashing notification of the Delhi government permitting Army Medical College to allocate 100 per cent seats for the children of Army personnel.
It said that the government cannot shy away from its constitutional responsibility to work for the welfare of people in the name of free markets.
"The necessity of such a role for the State should not be doubted, nor its Constitutional duty whittled down. This potential danger, and consequences, of evisceration of the role of the State was anticipated by the farmers of our Constitution," the court said.