Saying it is not enough

As admissions go, the Prime Minister's statement about crony capitalism on Tuesday ranks on a par with that by the national security advisor last year on how large swathes of the country were controlled by Maoists. It is comforting that the Prime Minister felt it necessary to react to a comment in the media that India's billionaires operate in markets that are oligopolistic in nature, but expressing concern should not be a substitute for action""for either the Prime Minister or the NSA. Part of the problem is historical. High tariff walls, for instance, ensured that Indian firms functioning from behind those walls enjoyed higher profitability rates than their global counterparts, and the licence raj ensured that the number of players in any sector was limited. While the licence raj disappeared in 1991, the government retains enough levers of control to ensure that it can play favourites""such as the power to allot land on favourable terms, giving mining rights when there is more than one contender for a quality mine, offering tax concessions designed to help your firm, and deciding the terms on which to allot scarce spectrum. It is here that the UPA has done little to improve things in the three years it has been in office.

Thus, the Competition Commission, whose primary mandate is to create competitive markets, continues to be lifeless several years after it was formed. But what would the Competition Commission have done to foster competition, when it is not clear if the government wants it? Even though it was pointed out to him at the time, the Prime Minister appointed a man whose brother runs a broadcasting empire as the person in charge of policies governing broadcasting! The man appointed to head the petroleum ministry, similarly, is someone who makes no secret of being close to the country's biggest private sector petroleum firm. Aren't these gilt-edged invitations for crony capitalism to flourish?

If the NDA government helped big business consolidate its position through various questionable deals, the UPA hasn't done much to give the impression that big business does not hold sway over policy formulation. The ink is barely dry on the minutes of the empowered group of ministers' recommendation that the size of special economic zones will be restricted to 5,000 hectares, and the commerce minister announces that the cap can always be lifted""that this happens around the time Reliance is petitioning the government to lift the cap for its own SEZs is of course a coincidence. Enough is known about how those in charge of industry-specific ministries are busy making money hand over fist, and about how monopoly rents are being earned in the infrastructure sector""mostly by retired bureaucrat-regulators who don't allow competition to come in""but none of this has spurred the government into any kind of corrective action. If the Prime Minister finds himself in a position where he is unable to do much to break these cosy clubs where big business is, by and large, able to mould policy to suit its own purposes, the least he can do is to not insult the ordinary person's intelligence by making statements that promise a lot but mean nothing.