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Effective competition important for fostering innovation, says CEA

Subramanian said policies should be such that it promote moderate level of competition for promoting innovation.

Press Trust of India  |  New Delhi 

Chief Economic Advisor KV Subramanian (Photo: Dalip Kumar)
Chief Economic Advisor KV Subramanian (Photo: Dalip Kumar)

Friday said effective is important for fostering innovation, promoting growth and generating employment opportunities in the country.

Also, he advocated for deterrence to make defaulting companies fall in line with set guidelines and follow pro-market behaviour.

"Innovation is so important in today's economy. If...this century has to belong to India then innovation is something that we have to focus on. Therefore, policy in the context of innovation becomes really critical," he said at a lecture organised by Commission of India (CII) here.

Effective competition in product markets and factor markets is important for fostering innovation in the Indian economy, he said, adding that this in turn will generate more jobs, encourage entrepreneurship and promote growth.

Subramanian said policies should be such that it promote moderate level of competition for promoting innovation.

He added that there are no incentives for promoting innovation in perfectly competitive market and even when the competition is low.

Deterrence is crucial for encouraging pro-market behaviour, he said citing an example of the Insolvency and Bankruptcy Code (IBC).

The fear of defaulting companies to be brought under the compelled many of them to voluntarily approach the banks and pay up, he said.

has catalysed the recovery of around Rs 3 lakh crore from various default cases, directly or indirectly, since its inception in 2016.

First Published: Fri, March 01 2019. 13:31 IST
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