March 02, 2005, Hyderabad, Press Release

Competition Policy can lead to pro-poor development, this message emerged in the seminar jointly organised by the Institute of Public Enterprises and CUTS International. This seminar was part of the outreach seminars, being organised by CUTS International in select cities of the country, to create awareness among various stakeholders on competition and economic regulation issues.

Raising the issue, P. Shiv Shankar, former union law minister mentioned that in a country where there is significant illiteracy, unemployment, and poverty, how can we expect competition to develop markets for growth and equity. He was querying about, how competition can lead to pro-poor development? He further added that, to address this issue, will require a change in the mindsets of people, to take corrective measures. However, in a country, where the Parliament passes key bills without any proper discussion, it is difficult to expect a change in mindsets. Shiv Shankar was of the opinion that the kind of competition we need has be as per our conditions, rather than copying the model of developed countries.

The seminar was organised to disseminate, the findings of a report, brought out by CUTS International on “Towards a Functional Competition Policy for India”. It was organised as two interactive sessions, one with media and other with local stakeholders.

Presenting the key findings of the report, Mr Pradeep S. Mehta, Secretary General, CUTS International, mentioned that the report gives various examples highlighting that competition policy can indeed lead to pro-poor development. One such case, relates to the distortions that exist in the agriculture markets, because of the operation of agro-commercial firms. As a result, while consumer pay a high price, farmers get a lower price for their produce, as the agro-commercial firms, siphon off the difference as huge margins. The example of Rythu Bazaar in Andhra is a case in point, where farmers and consumers come in direct contact with each other, which is a win-win situation for all. There are several cases, where even illiterate people have benfitted from competition, by using the systems, which are in place to check such abuses.

Dr. Chakravarthy, former Member, MRTP Commission, outlined the main provisions in the new Competition Act, 2002, and clarified that the equity which is being talked about refers to that between market players, consumers.

Mr. Srinivas Raghavan, Consulting Editor, Business Standard, mentioned that there are situations where even a monopoly can bring about better outcomes – provided it is a properly regulated monopoly. For eg., the Indian Railways which is a government managed monopoly and provides various services at affordable prices.

Prof. R K Mishra, Director, Institute of Public Enterprise, spoke about public sector and competition, and highlighted the governance issues, which affects the functioning of public-sector units (PSUs). He advocated for governance reforms to create a level playing field for PSUs.

Prof Vikas Singh of IPE who was coordinator of the seminar proposed the vote of thanks.

A message that came out from the seminar was that competition is not a panacea for all ills, but by checking distortions in the market, competition policy can result in benefits of competition being passed on to consumers – urban and rural, rich and poor!

It was also realised that there are several competition abuses that exist at local level, and there is a need for a local level agency, may be a state-level competition agency, to check such practices. Cable TV sector, is one example, which requires local level regulation, as there are monopolies at consumer’s end. After all, consumers do not have the choice to change their cable operator! Similar practices exist in other local level services and intermediate goods sector, such as, truck operators cartel, taxi/auto operators cartel, tied selling by schools, nexus between doctors and laboratories. All these are practices, which require local level solutions.