Ranabir Ray Choudhury

It remains to be seen how the Jet-Sahara acquisition will be seen by the authorities. Clearly, there is much more to the issue than just a particular businesss battle because, in today's world, competition cannot but be treated as the bedrock of economic development.

THE recent mega deal between Jet and Sahara, which has given ownership control of the latter to the former, will, if approved by the authorities, bring about a big change in the Indian skies. Among other things, the deal will give more than 50 per cent control of domestic civil aviation traffic to one private airline, pushing Indian Airlines (rechristened Indian) down to a lowly second position, followed by the other new entrants which are not much more than small-bit players.

The question is: Will this new scheme of things in the Indian civil aviation sphere lead to more competition among the existing players (leading to the average flier being benefited), or will the predominance of one airline by a large margin result in a decline in competition (and less freedom of choice for the ordinary flying citizen)?

The issue has in fact already shot into prominence because the focus has now shifted to whether or not the Government will approve of the deal, principally on the ground of fair competition.

The subject is tricky because the deal itself has been the result of stiff competition between the two airlines involved, Sahara losing out to Jet in the battle. This, therefore, can be seen as a case (by those who are not favourably inclined towards the deal) where competition has worked itself out to a position which has taken on a monopoly hue.

In other words, the more competitive airline among the two has won but, in doing so, has created a situation where it has left its other competitors far behind, thus diluting the competitive element in the new-look Indian airlines business.

So what should the Government do in the circumstance? Needless to say, it has a number of options before it, However, as one sees it, it should never do anything which would give the impression that it has been unfair to Jet.

After all, the success of the Indian economy today is being built on the premise of "free and fair" competition with appropriate Government regulation, which means that nothing should be done which would be seen to go against the grain of this broad development policy. In fact, the danger arising from a violation of this credo lies more outside the country than inside it, specially at this juncture when India is being held up as an example of a rapidly-progressing developing economy.

Curbs on free and fair competition will not go down well with the international investment community which, everyone will agree, can only have a dampening impact on future growth prospects.

What does the Common Minimum Programme of the UPA Government have to say on the broad subject of competition, etc? To start with, one of the principles of governance cited in the programme says that the policies would be framed and implemented which would "unleash the creative energies of our entrepreneurs, businessmen, scientists, engineers and all other professionals and productive forces of society".

What this should ordinarily mean is that the competitive forces within the economy must be given free rein because it is only by doing so that the "creative energies" concerned can be given a fair chance to flower best.

In fact, the CMP has advocated the setting up of a National Manufacturing Competitiveness Council which is expected "to provide a continuing forum for policy dialogue to energise and sustain the growth of manufacturing industry like food processing, textiles and garments, engineering, consumer goods, pharmaceuticals, capital goods, leather, and IT hardware".

But the programme also includes brakes on unbridled competition which can turn out to be important tools in the hands of those who do not feel comfortable with the idea of depending too much on the private sector for the economy's overall development.

On the private sector, the CMP says: "The UPA attaches the highest priority to the development and expansion of physical infrastructure like roads, highways, ports, power, railways, water supply, sewage treatment and sanitation. Public investment in infrastructure will be enhanced, even as the role of the private sector is expanded". However, there is also the following caveat which, in theory, could turn out to be Dr Frankenstein's monster: "The UPA government believes that privatisation should increase competition, not decrease it. It will not support the emergence of any monopoly that only restricts competition".

It remains to be seen how the Jet-Sahara acquisition issue will be seen by the authorities, there being enough support in the CMP to justify both an approval or rejection of the deal.

But, clearly, there is much more to the subject than just a particular airline business-battle because, in today's world, competition (even State-controlled competition) cannot but be treated as the bedrock of economic development.

In other words, economic reform — in the Indian case this would mean a shift from the public-sector controlled economy of the 1960s, 1970s and 1980s to one where both the private and public sectors are engaged in healthy competition with each other and with foreign corporate entities — must form the core of any 21st Century economic development programme. In fact, the CMP itself takes cognizance of this point when it states unequivocally: "The UPA reiterates its abiding commitment to economic reforms with a human face, that stimulates growth, investment and employment. Further reforms are needed and will be carried out in agriculture, industry and services.

The UPA's economic reforms will be oriented primarily to spreading and deepening rural prosperity, to significantly improving the quality of public systems and delivery of public services, to bringing about a visible and tangible difference in the quality of life of ordinary citizens of our country".

There is little doubt that there has been a lot progress as far as conceptualisation and implementation of aspects of reform are concerned ever since Dr Manmohan Singh, as the Union Finance Minister, set the ball rolling in 1991. In fact, every Government at the Centre in the 1990s did its bit, gradually adding to the corpus of reforms which today has set the national economy on a sustainable growth path.

This is certainly a feather in the republic's cap, in a way effectively giving the lie to the thesis that the Indian elephant will never be able to break into a run.

But, of course, there is much that remains to be done in sweeping away the cobwebs of the past — a job that has been made even more difficult because it involves changing the way people have been used to looking at things and thinking about them.

As the visiting former Singapore Prime Minister, Mr Goh Chok Tong, told an audience in Kolkata last week: "The old mindset is that competition is undesirable because it leads to foreign economic colonisation. In reality, protectionism produces economic stagnation and breeds complacency as well as inefficiency.

Competition spurs innovation and compels business to become stronger, more efficient and better equipped to tap global opportunities. Governments must work to remove hurdles to healthy competition".

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