Absence of pro-competition policy promotes crony capitalism: Arun Jaitley
Pitching for more competition, Finance Minister Arun Jaitley on Friday cautioned that pro-business environment without "pro-competition" policies can result in dangerous consequences, including crony capitalism.
"Being pro-business alone is not enough. Being pro-competition is essential to be with pro-business. If you are pro-business without being pro-competition, the consequences could be very dangerous," he said in his annual day lecture of Competition Commission of India (CCI).
Citing an example of Russia, he said, the country went in for a lot of privatisation without emphasis on pro-competition resulting in the creation of oligarchs.
"Oligarchs again meant monopolies. So any pro-business policy per se also has to be pro-competition because without pro-competition, being pro-business itself can encourage oligarchs. It can encourage crony capitalism which itself is dangerous," Jaitley, who is also the Corporate Affairs Minister, said.
With India's transformation from a regulated to a market economy, Jaitley said the government had dual capacity in the context of running enterprises such as BSNL, general insurance companies, and Life Insurance Corporation of India (LIC).
Then there was the need to have "regulators at arms length from the government... The more we professionalise them better it is for our economy," he said.
Highlighting the importance of competition and its impact on growth, the Finance Minister said, "today, the world over people have investment and when they choose they never invest in a sluggish economy. They want to invest in a more competitive economy, they want to invest in a fair economy, they want to invest in an economy where entry and exit are easy, where the rules of business are fair."
With the passage of Bankruptcy and Insolvency Code, the easy exit will be facilitated.
"An investor does not want to invest in a jurisdiction where the exit is difficult. Therefore, with now proper regime created there would be a significant improvement in that area," he noted.
He pointed out that when investment comes in, it becomes the starting point for all economic activities, adding that an economy without investment can never add to its growth.
Citing an example of competition providing a plethora of choice to customers, Jaitley said an advent of e-commerce has provided widest possible choices of goods to the consumers at most competitive prices at the click of a button.
"Competition promotes technology at most reasonable prices, competition will provide quality of services/products to the consumers at competitive prices. It promotes innovation, efficiency and quality," he said.