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Competition policy awaits cabinet nod

A final draft of the National Competition Policy is ready for the Union cabinet’s nod to unleash the next wave of reforms in India by ensuring the vast government apparatus doesn’t restrict market activity beyond a certain point. Hearald of reforms?

business Updated: Nov 10, 2011 21:35 IST
Yashwant Raj

A final draft of the National Competition Policy is ready for the Union cabinet’s nod to unleash the next wave of reforms in India by ensuring the vast government apparatus doesn’t restrict market activity beyond a certain point. That certain point is going to be the government’s social and other goals.

It will usher the next wave of reforms, said corporate affairs minister Veerappa Moily, whose ministry recently received the final draft. http://www.hindustantimes.com/Images/HTEditImages/Images/11-11-11-buss25b.jpg



The need for National Competition Policy has been felt for a long time, going back to 1997, and has been endorsed by several committees, panels and the planning commission.

“If this policy is adopted, all the ministries will be asked to undertake a close, hard look at all the laws and legislations in their charge to see if there are any anti-competitive outcomes thereof,” said Dhanendra Kumar, chairman of the drafting panel.

A National Competition Policy Committee, a body of experts, will be there at hand to help the ministries carry out these checks — called competition impact assessment — and recommend correctives. The parameters for checking a policy’s competition-friendliness will be broadly three: whether it restricts the number of players, restricts entry or exit, and any other parameters that seeks to disqualify players unnecessarily.

It’s an ambitious all-encompassing policy that seeks to bring in line, for instance, state governments who separately pursue policies that “artificially segment the markets in India”, says the draft policy. A unified market is good for competition. “The evolution of a single national market in the country, with minimum barriers, will be in the interest of competition,” said the draft report.