PM calls for more autonomy for state-run firms

Prime Minister Manmohan Singh Thursday favoured granting greater functional autonomy to state-owned companies and not shield them from competition from the private sector.

"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. Going forward, our governments will have to increasingly adopt competition-neutral policies," Singh said, addressing the 3rd BRICS International Competition Conference organised here by the Competition Commission of India.

He told competition regulatory authority officials from the five BRICS countries (Brazil, Russia, India, China and South Africa) that the government's ownership of companies did not mean that these enterprises should be shielded from competition.

"The solution lies in giving public sector firms greater functional autonomy and freeing them from bureaucratic control and not in tolerating a slip in their competitiveness and then shielding them from competition," said the prime minister.

"There is an increasing need to recognise the complementarities between competition law enforcement and liberalisation of markets for procurement," he added.

Pointing out that public procurement formed a substantial slice of state spending, the prime minister said competitive procurement markets could help save valuable financial resources.

"Public procurement, more specifically, is a substantial slice of state spending in most emerging economies. Elimination of unnecessary restrictions and better tender design can, therefore, enhance possibilities for effective competition, thereby making bid rigging more difficult."

The two-day conference will discuss various issues such as enforcement of competition laws vis-a-vis state-owned enterprises, public procurement and creation of competition culture.