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Competition can unlock growth potential of India: Ashok Chawla

Team Inclusion

Mumbai, 12th June 2015: Effective and credible institutions and a transparent ecosystem, especially in the areas of public procurement, infrastructure and services are essential to ensure long-term sustainable growth in India, Chairman of Competition Commission of India Ashok Chawla said at the 40th Skoch Summit here Friday.

Addressing a session at the second-day of the two-day Summit organised here by Skoch Group in association with the Bombay Stock Exchange (BSE), Chawla said the recent macroeconomic numbers have imbued optimism for an impending recovery, but it was not enough.

“The challenge at this juncture is not just to regain the lost momentum, but to create conditions for a growth that is sustainable over the next 15 to 20 years,” he said.

Theme of the 40th Skoch Summit, held at the historic BSE building in the country’s commercial capital, is “Making India $20 Trillion Economy”.

Chawla said a timeframe of say 15 years should be set to make India a $20 trillion economy from the current around $2 trillion.

He listed three key areas – public procurement, infrastructure and services – where competition can play a catalytic role in unlocking growth potential for the whole economy.

Public procurement accounts for a significant proportion of GDP in India. Major departments like defence, railway, power telecom and aviation spend about half of their budget on procurement. “Liberalisation of the procurement markets, through the elimination of needless and unfair restrictions on the competing suppliers, will result in value for money,” he said.

Referring to an OECD survey, Chawla said implementation of transparent and competitive government procurement regimes have resulted in savings to the public treasures between 17 per cent and 43 per cent in some developing countries. “This can help augment governments’ ability to invest in social and physical infrastructure,” he said.

He said some key infrastructure sectors, notably power, is hit by lack of competition. “Many of the critical infrastructure sectors in India are under producing due to lack of competition. The worst hit due to lack of competition is the power sector.”

He pointed out that the control of distribution infrastructure gives rise to access issues for generating companies and traders at the retail supply level. “Managing such infrastructure in an openly accessible manner permits a wide range of producers of private, public and non-market goods to flourish,” he said.

For services sector, Chawla said although the Indian economy has leap-froged from the primary sector to services, many services remain somewhat closed and there is need to allow open competition in the sector that would help further accelerate the growth.

“The remarkable shift in the India growth story from the so-called Hindu rate in the pre-reform era to the golden growth period post 2000 itself is a testament o the kind of growth potential that competition may unleash,” he said.

(Comments are welcome at info@skoch.in)

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