We need a competition policy but it will be superfluous till entry and exit barriers remain, argues Subir Gokarn
The report of the high level committee on competition policy submitted last week was accompanied by two supplementary notes, one note of dissent and one comment of dissent. These revealed the range of opinions that the members of the committee had on the three fundamental questions that they had to address in putting the report together. One, does India need a competition policy? Two, if it does, what should it ideally be? Three, does the prevailing policy environment allow us to formulate anything close to the ideal competition policy, and if not, is what is feasible going to be of any use at all?
The report begins by making a distinction between policies that have the effect of increasing competitive intensity, such as trade liberalisation, and a policy that is specifically designed to promote competition in situations in which the broader policy regime does not do it. It justifies the need for a competition policy by arguing that trade liberalisation in and of itself cannot ensure competition, because of
