It is an indication of how far the country has moved from a reform mindset that, in one sector after another, anti-reform measures get mooted and even accepted, with little or no protest. Thus we have not just a halt to disinvestment but the start of "re-investment", since the government seems to be taking back control of companies that it had sold, while ignoring contractual commitments because it does not like those commitments any more. We have the extension of price controls in pharmaceuticals, with a grateful drug industry accepting the new constraints because the alternative held out was much worse. And in a scenario that will do far-reaching damage to India's energy sector, there is the freeze-frame on oil price hikes even as price subsidies are in the region of Rs 100,000 crore! | |
| That is not all. We have the re-imposition of movement and stock controls on agricultural commodities, in a move said to be designed to control price increases. We also have the electricity regulator undoing the Electricity Act of 2003 by seeking to impose de facto price controls and trading margins on the nascent market for electricity, virtually making electricity trading unviable. We have a Broadcast Bill that, even after modification in the wake of universal criticism, seeks to mend things that are not broken, and comes up with remedies that are worse than the disease. And the telecom regulator amazingly seeks to impose a "one price fits all" rule for all television channels that are not free-to-air! Did anyone say that India is moving to a market economy? |
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| More than three decades ago, the government tried to impose similar price control on newspapers through the infamous price-page schedule, and it was fortuitous that the Supreme Court struck that down. The very thought of linking a newspaper's price to the number of pages it offers, comes across as ludicrous today because of the conditions brought about in a competitive marketplace, but until the idea was successfully challenged under the Constitutional protection given to freedom of speech, it had the force of law and newspapers looked anaemic. In today's variant, will TV channels find programme budgets shrink because the regulator will not allow them to make money? |
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| One problem is that regulation of industry has become an acceptable idea because of the mushrooming of regulators at every turn, and suddenly ex-bureaucrats armed with legislative backing can have a field day dictating arbitrary rules to all and sundry, whether it is in buying and selling electricity or producing TV software. In sector after sector that has been opened up to private enterprise, the correct remedy to potential problems of market structure, consumer protection and collusive pricing would seem to lie in the effective functioning of a Competition Commission. But the Commission continues to be in limbo, while regulators from a dirigiste past run riot in an allegedly open market environment. Bear in mind that telecom rates have come down because of the march of technology and the arrival of competition, not so much because the regulator mandated it. Similarly, the regulator for ports holds up port charges while the market pushes them down. And if electricity prices move up in the traded market, it is an incentive for people to invest in fresh capacity and end India's perennial power shortage. However, the anti-liberal environment is now so pervasive that almost any regressive suggestion that is made finds easy acceptance. |
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