NEW DELHI, Nov 21: Favouring state-run companies becoming more competitive, Prime Minister Manmohan Singh today said the public sector enterprises have to be provided greater functional autonomy and freed from bureaucratic control.
“Going forward, our governments will have to increasingly adopt competition-neutral policies… Competitive neutrality requires that the government not use its legislative and fiscal powers to give undue advantage to its own businesses over the private sector,” he said.
Speaking at the BRICS Competition Conference here, Singh said the solution lies in providing “greater functional autonomy” to public sector firms and freeing them from bureaucratic control, and not in tolerating a slip in their competitiveness and then shielding them from competition.
Singh observed that by virtue of their ownership, public sector companies have long enjoyed captive markets and been shielded from competition.
Stating that exposure of public sector enterprises to increased competition is a crucial issue, Singh said government owning a firm does not mean that it should shelter the company from competition as well.
“Unfortunately, government ownership inevitably brings with it a bureaucratic style of decision-making and the end result is that the enterprise cannot compete in a market populated by equals,” the Prime Minister said.
Addressing officials of fair trade regulatory authorities from the BRICS grouping — Brazil, Russia, India, China and South Africa — and other nations, Singh said a competitive public procurement market can make bid rigging more difficult.
Noting that anti-competitive behaviour hurts the “poor most of all”, Singh said that effective competition in markets need to be created and enforced through public policy.
“… Fair and effective competition in markets is easier said than done. It has to be created and enforced through public policy. Otherwise, private barriers may simply substitute governmental barriers to trade and prevent improvements in social welfare,” Singh said.
According to him, there is an increasing need to recognise the complimentarities between competition law enforcement and liberalisation of markets for procurement.
Emphasising that public procurement forms a substantial slice of state spending, the Prime Minister said competitive procurement markets can help save valuable fiscal resources.
Meanwhile, expressing hope that BRICS would emerge as global economic powerhouses, Singh said that agreements are in the pipeline for setting up of a BRICS Development Bank and a contingency reserve arrangement for the benefit of five nations.
Stressing the need for greater economic and political co-ordination among the member nations, Singh said they face common challenges such as in monitoring and managing capital flows in times of global uncertainties.
“Growth, development and poverty reduction are the most important challenges that our governments face,” he said.
Singh said India is poised to become the most significant exporter of services, while China is on the path to becoming the undisputed global leader in export of manufactured goods.
Besides, South Africa is ideally situated to reap dividends from the untapped growth potential of African continent, while Russia and Brazil dominate as exporters of raw materials, he added.
BRICS countries have a combined population of three billion with a total GDP of nearly USD 14 trillion and about USD 4 trillion of forex reserves, Singh noted.
The two-day conference would deliberate various issues and challenges including public procurement and creation of competition culture. The theme of this year’s conference is ‘Competition Enforcement in BRICS Countries: Issues and Challenges’. (PTI)
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