Clarifying that the present central government was "neither pro - nor anti - business", Commerce Minister Nirmala Sitharaman on Thursday said India needs a fair trade regulator like the Competition Commission in the current transitional phase of the economy to prevent formation of oligarchies, monopolies or cartels.
"We want a Competition Commission that is going to look at things from the point of view of today's situation of India rather than think we are in a completely free market, and we need a regulator that is minimal or don't need a regulator, " Sitharaman said while addressing a conference here on competition law organised by the Competition Commission of India (CCI).
"Collusive bidding, cartelisation. . . these are serious issues, and so the CCI has a very very important role to play for fair trade as well as for consumer benefit, " the Minister said, pointing out that the regulator had recently penalised a cement cartel for anti - competitive behaviour.
"Last month, CCI penalised the rigging of bids in cement supply to the government, " the minister added.
With India's economic transition from a command economy to a free market one, begun in 1991 and still ongoing in a "rather protracted" manner, the caution of both the government and the regulator in order to check oligarchic practices is justified, Sitharaman said.
"To compare India with Singapore and China would lead us to frustration.
Can we be a Singapore - like free economy straightaway. . . no, " she said.
"This is because social, economic, educational levels are unveven across the country. . .
So, we have to temper down aspirations somewhat in execution of policy, " she added.
The Commerce Minister said it was not possible to "jump from control economy to complete privatisation".
"We need to support the private sector without an approach of either supporting business or going against buisness so as to prevent formation of oligarchies. "
In this connection, she noted that public procurement needed to be opened up to fair competition.
"Today 30 per cent of our GDP in India goes under the public procurement bracket and most of it is coming from defence, railways and telecom.
You still have public procurement and you have to open up layer after layer.
Till then, shouldn't we be requiring a CCI to ensure that even at this transition phase we are being fair, " she said.
Addressing the gathering, Chief Economic Advisor Arvind Subramanian said that the experience of Russian oligarchs post the collapse of the Soviet state in the early '90s "teaches that privatisation per se does not encourage competition".
Subramanian also said that India being a highly litigous society "where everything is going to courts, the situation is a challenging one for the CCI. "
"I don't think we have achieved the kind of maturity in our regulatory systems as we need to.
There are number of reasons why i this happens.
Capacity is a real problem.
We need more and more talent, " he said.
Subramanian also stressed the need for an easy entry and exit process for businesses.
"We have made great progress on entry but we are seriously lagging behind on exit.
If there is one bane on the Indian economy, it is that exit is not happening quickly enough and it does impede competition, " he said.
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