Equity in allocation
Also called: fairness · Topic: Markets, Equilibrium and Government Intervention · NCERT: Class 9, Ch 9 "The Price Puzzle: What Drives the Market"
Meaning
Equity in allocation means making sure vulnerable and low-income groups get essential goods even when the market alone would leave them out. Markets hand out goods by willingness and ability to pay. So if food or medicines become very expensive, the poor are priced out. Equity is a key reason governments step in with price ceilings, subsidies and public distribution, even though these can reduce efficiency.
Example
Under the National Food Security Act (NFSA) 2013, priority households get 5 kg of foodgrain per person per month through fair price shops. Antyodaya Anna Yojana (AAY) households get 35 kg per household. This grain has been free under PMGKAY since 1 January 2024, for five years, so poor families get food whatever the market price.
Don't confuse with
- Efficiency: this is about getting the most total benefit (consumer plus producer surplus) out of resources. Equity is about who gets the goods. Improving one can cost some of the other.