Prime Minister Manmohan Singh says developing economies must begin doing away with the practice of sheltering state-owned companies from market competition. "By virtue of ownership, they have been shielded from competition and, for long, have enjoyed captive markets," he said.
State ownership, the PM said, inevitably led to a bureaucratic style of decision making. The result was to make these enterprises unable to compete on their own. He said a solution was to give such companies more financial autonomy and freedom from bureaucratic control.
Singh made these remarks while inaugurating the International Competition Conference of the BRICS (Brazil, Russia, India, China and South Africa) group of nations. He chose to caution bloc members on the volatility of portfolio investments, accentuated by the repeated speculation on tapering of the US Federal Reserve's quantitative easing programme.
More From This Section
Capital markets worldwide, particularly in emerging market economies, witness huge volatility as soon as talk about QE tapering begins, the prime minister noted.
Most analysts say the next Federal Reserve chairman, Janet Yellen, might not opt for tapering soon. They also say the programme of $85-billion bond-buying a month cannot be continued indefinitely.
Pointing out that each of the five nations was equipped with advantages, the prime minister said India was poised to be the most significant exporter of services.
Singh said BRICS nations have two crucial agreements in the pipeline - to set up a development bank and a contingency reserve arrangement.