New Delhi (India), April 08, 2015
Cognisance of externalities necessary for promoting competition reforms in key sectors
New Delhi (India), April 09, 2015
There is a need to be conscious of macro-environmental conditions as we push for much-needed economic and competition reforms in sectors, stressed Brijeshwar Singh, Former Chairman, NHAI (National Highways Authority of India). While Pradeep S Mehta, Secretary General of CUTS cautioned that political economy considerations should be kept in mind, while pursuing competition reforms in developing and least developed countries. Both of them pointed out that using evidence of additional financial stress on states incurred by promoting monopolies and restricting private engagement can be used to rally greater political support for competition reforms in such settings.
These were some of the key messages that emerged from the fourth National Reference Group (NRG) meeting organised by CUTS, in New Delhi on April 8. The meeting was held to deliberate on CUTS plan for promoting competition reforms in select states of India under the CREW project (Competition Reforms in Key Markets for Enhancing Social & Economic Welfare in Developing Countries, www.cuts-ccier.org/CREW). This project being undertaken by CUTS considers two sectors bus transport and staple food in India and three more countries, Ghana, Zambia and The Philippines. In India, it looks at the wheat market under staple food in the states of Bihar and Rajasthan; while bus transport has been covered in Madhya Pradesh and Gujarat.
The meeting was attended by around 20 participants including Brijeshwar Singh, Former Chairman, National Highways Authority of India; Malay Shrivastava, Principal Secretary., Department of Transport (Madhya Pradesh); Payal Malik, Adviser (Economics) Competition Commission of India; Arvind Kumar, Former Senior Adviser, Ministry of Road Transport & Highways; Ajay Vir Jhakar, Bharat Krishak Samaj (Farmers Forum), V. C. Mathur, Indian Agricultural Research Institute and Pradeep S. Mehta, Secretary General, CUTS International.
The research phase under the project has looked at contrasting regulatory approaches in the two sectors adopted by (Madhya Pradesh and Gujarat for Bus Transport) and (Bihar and Rajasthan for Wheat) and the possible impact on consumers and producers. While the Agricultural Produce Marketing Committee (APMC) Act has been abolished by Bihar in 2006, Rajasthan has continued to pursue the system. Similarly Madhya Pradesh has wound up its State Road Transport Corporation (MPSRTC) in 2005 while a State Road Transport Undertaking (GSRTC) continues to operate in Gujarat.
Singh asserted that there is need to invest in building capacities of state-level regulators before setting up a regulatory framework and/or institution for them to be effective. He mentioned that lessons in this regard can be drawn from state electricity regulatory agencies, etc. Pradeep S Mehta agreed that States indeed need to have the capacity to understand and design economic regulation, while regulatory strategies would have to be customised as against pursuing a one size fits all approach.
Ajay Vir Jakhar of Bharat Krishak Samaj highlighted the need for taking views of the private sector on their lack of participation in the wheat sector in Bihar and Rajasthan. He emphasised on the need for public infrastructure ( mandis ) for private players and farmers to be able to better interact and develop a win-win . V C Mathur supported CUTS approach of assessing the implications of abolishment of APMC in a state like Bihar on farmers through primary survey as that does not seem to have been undertaken. The state government would benefit greatly from these findings, he asserted. Designing public-private partnerships to enable effective engagement of private sector in the wheat sector, should be explored in both the states. CUTS would also try to identify reasons of non-participation of private sector in wheat procurement and development of private markets.
Payal Malik from the CCI emphasised on the need to have a robust legal construct as the first step to allow greater private participation, and using that as a precursor/guide for developing market structures. She agreed to CUTS view for the need of having a guideline for pro-competitive tendering for engaging bus transport service providers and assured CCI s support in taking this forward with CUTS, especially in the two states of Madhya Pradesh and Gujarat.
Malay Shrivastav, Principal Secretary (Transport), Madhya Pradesh explained the rationale behind establishing a new transport authority titled Madhya Pradesh Inter-city Transport Authority. He described the need of providing well maintained bus stations on public-private-partnerships. Additionally it is essential to enhance the accessibility of buses to commuters in MP, which is currently a weakness.
CUTS offered to support the Department of Transport, Madhya Pradesh, by providing knowledge partnership on two issues of immediate importance: (i) route rationalisation on intercity routes and (ii) highlighting good practices in bus transport infrastructure (bus stations) development from across India.
In conclusion, CUTS thanked the participants for their inputs and assured to use their advice for refining the advocacy plan.