Prime Minister Manmohan Singh on Thursday said greater functional autonomy and independence from bureaucratic control will help public sector enterprises become more competitive.
Speaking at the BRICS (Brazil, Russia, India, China and South Africa) Competition Conference here, the Prime Minister said that state owned units have enjoyed captive markets and have been, over the years, shielded from competition.
“Going forward, our governments will have to increasingly adopt competition-neutral policies. Competitive neutrality requires that the government not use its legislative and fiscal powers to give undue advantage to its own businesses over the private sector,” he said during the conference themed ‘Competition enforcement in BRICS countries: Issues and Challenges.
Emphasising on greater functional autonomy, he reportedly said that such companies should become increasingly competitive and not shy away from competition from other players. He conceded, “unfortunately, government ownership inevitably brings with it a bureaucratic style of decision-making and the end result is that the enterprise cannot compete in a market populated by equals.”
Further he said that freeing PSUs from control is a scenario ‘easier said than done’. “It has to be created and enforced through public policy. Otherwise, private barriers may simply substitute governmental barriers to trade and prevent improvements in social welfare,” he said.
The five developing nations is reported to have a total GDP of $14 trillion and around $4 trillion of forex reserves. They account for nearly half the world’s population with around 3 billion people between them.
Stating the common challenges faced by BRICS nations such as monitoring and managing capital flows into the country, he emphasised on need for greater economic and political coordination. Singh also urged for the setting up of a BRICS development bank for the benefit of the five nations. “Growth, development and poverty reduction are the most important challenges that our governments face,” he said.