FM warns CCI of creating hurdles in way of economic growth
Says, CCI must continue to be a lean organisation, picking issues it can weigh carefully, making a difference
Finance Minister P Chidambaram has cautioned the Competition Commission
of India (CCI) against becoming another bureaucracy to pull down
economic growth.
"Competition regulation must not become another bureaucracy, stifling
growth," Chidambaram said while delivering an inaugural speech in the
annual day function of CCI here last night.
He said the CCI must continue to be a lean organisation, picking the
issues it can weigh on carefully, and making a difference when it does.
Its rulings must be transparent and afford clarity rather than obscurity.
"And it should avoid the perils of overreach as well as regulatory
capture. The Competition Commission will play an important part in
defining the role of the government as a regulator of competition and as
a participant in the competitive process. Increasingly, the
government’s role as regulator will, and should, become more important
than its role as a competitor. The Competition Commission will be a part
of this transformation," he said.
Chidambaram also added a caveat that sometimes choice can be improved in more subtle ways than regulation.
"Competition is about improving choice. And sometimes choice can be improved in more subtle ways than regulation," he said.
He cited an example of direct benefit transfers to buttress his point of
view. DBT, he said will allow the poor much more choice on who they get
their benefits from -- the bank or the post office. "And if it is a
bank, which bank and from which banking correspondent. That will truly
empower the poor and force providers to compete for their custom. I
cannot think of a bigger blow for competition, choice, and empowerment,"
he said.
An important role of the Competition Commission in the years to come
will be to guide us on how the interaction between the Government and
public sector firms should play out to create the most competitive
environment that we can, he added.
Chidambaram also posed queries before the audience in the new era of
competition policy. "Are there ways to push the envelope on efficiency
without compromising equity? Should the few remaining public sector
monopolies be broken up into competing public sector entities? How do we
create a role for the private sector in areas that are still perceived
to be natural monopolies and hence reserved for the public sector? And
what about public sector entities that cannot compete, and have been
kept alive through regular contributions from the exchequer? Are such
regular infusions distorting the competitive arena?"
At a time when the government's minimum support price policy for
agricultural produce often draws flak, the finance minister said an
often neglected area of competition policy is public procurement.
"In the case of agriculture the minimum support price (MSP) and
open-ended procurement have served our farmers well. But can we procure
in a better way?" he asked.
Currently, as a result of how the MSP and procurement policy are set,
the government is the largest and in many ways the only bulk buyer of
cereals, Chidambaram said.
"But, in the process, it is crowding out private sector procurement.
The discovery of market prices for cereals is affected by government
policy. What role should competition policy play in bringing private
players into procurement and in improving the benefits to both the
farmer and the consumer? The role of competition policy in improving
procurement is a question we need to debate," he said.
--
CA. Rajesh Desai