11th Plan fairplay check may deprive PSUs of headstart

NEW DELHI: Government-owned companies may soon lose the patronage that they get from favourable laws. Sectoral policies are set to be more consumer-friendly and tuned to promote competition in the market with the government considering a national competition policy that would ensure that all legislations pass the litmus test of competition principles.

In other words, sectoral policies cannot be skewed to give unfair advantage to government departments, public sector companies and other government-owned entities competing with private sector players in the market.

A national policy will also ensure that arbitrary economic regulation by regulators would not take place. This is significant considering the fact that due to the advocacy efforts of the Competition Commission of India, the government recently lowered the postal service segment it wanted to keep to itself exclusively from 500 gm to 350 gm.

Competition from private courier companies would make the service more efficient in the absence of state monopoly, the regulator had argued. The regulator, which is yet to get enforcement powers, also recently asked the government not to venture into economic regulation of warehousing receipts — a negotiable instrument meant to enhance credit availability to farmers.

The incentives given as part of a public private partnership that are prone to abuse by the private company also came under the commission’s scrutiny recently. A Bill to amend the law to give it enforcement powers will be introduced in Parliament in the current session.

The Planning Commission has recommended to the ministry of corporate affairs that there should also be an autonomous oversight council to assess the progress in reviewing existing laws and in the competition impact assessment of new laws.

The recommendations would also form part of the 11th Five Year Plan document, a blueprint for the government’s future initiatives. The proposed competition audit is set to limit competition restricting clauses in legislations. The Planning Commission has also recommended that regulatory impact assessment should be mandatorily done before bringing new laws. In addition, all privatisation attempts should be examined from the competition perspective.

The commission has also recommended that in sectors where there is no natural monopoly or where no universal service obligation exists, there is no need for regulators. Such sectors should ideally be left to market forces. Even in industries, where regulation is required, it should be competition driven. Once a highly competitive market is established, there should be no economic regulation.