Excessive competition can lead to stress in particular sector: Jaitley

Finance Minister Arun Jaitley on Monday acknowledged the need for healthy competition in the markets even as he warned against excessive competition, which he said could lead to financial stress in the whole sector.

Speaking at an event organised by the Competition Commission of India (CCI), he said the competition regulator was created to ensure effective competition so that consumer interest could be protected.

"However, excessive competition at times can result in pricing of a nature that the (concerned) sector of the economy itself feels stressed, because everybody then tends to follow the leader," Jaitley said.

He said that such challenges were likely to increase with the expansion in the country's economy and markets.

"At our present growth rates, our expansion is going to be exponential and therefore the size of the industry of the services sector will increase and the role of each regulator, while exercising self restraint, will also expand."

One of the sectors, which has actually been hit by high competition among the market players is the telecom sector, where the entry of Reliance Jio with unprecedented low tariffs hit the existing players.

The Minister, talking on the need for proper regulations to auction public resources took a dig at the much controversial 2G spectrum auction which was based on the first-come-first-serve policy.

"If you recollect the spectrum case, one of the issues was that whoever comes first satisfying the LoI (Letter of Intent), which was issued to them, will be the preferred party. So, not only did they sprint first to go to the seventh or eight floor, but when the rivals came the lifts stopped working.

"There were obstructionists standing in the car park to prevent people."

Further, speaking on the need for multiple players in the market, Jaitley said that multiple players in the market ensure larger consumer interest.

--IANS

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