The Supreme Court has advised the government to regulate free market, as it benefits only few persons leading to increased inequalities in the society.
A bench of justice B Sudershan Reddy and justice SS Nijjar said the unregulated free market would lead to massive market failures, in even with respect to those aspects in which markets are supposed to function efficiently.
The pillars of modern economy - liberalisation, privatisation and globalisation - came under SC's sharp criticism, while the bench quashed Delhi Government's notification permitting ArmyMedicalCollegeto allocate 100 per cent seats for the children of Army personnel.
The apex court held that government could not 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.
Referring to various works of economists who had expressed their opinion against unregulated free markets, the bench further added: "Moreover, it is also very well recognised that markets, instead of eradicating discriminations and disadvantages, may in fact perpetuate the same."
"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 observed.