FTP Welcome, But Need To Tighten Regulatory Framework

New Delhi, April 16, 2008

CUTS International, a leading economic policy research and advocacy group has welcomed the forward looking supplement on the Foreign Trade Policy, 2008, in particular the thrust on gender empowerment, for the first time since the policy was adopted some time ago.

“It is a forward looking strategy which has provided several incentives for women’s engagement and empowerment in our export efforts, and will thus aid poverty reduction efforts of the government”, said Pradeep S Mehta, CUTS Secretary General in a press release issued here today.

The FTP recommends that the Government will provide incentives to exporters who recruit more women, provide better facilities to them and also pay equal wages. Further, the policy will also offer incentives to women entrepreneurs.

Sometime ago, in a study on SEZs done by CUTS International for the Department of Commerce, it was found that women were the greater beneficiaries. The study showed that some units had also undertaken special education programmes for women in the communities surrounding the SEZ.

However, Mehta lamented the fact that much of our exports are hamstrung by cartels of different nature and that there is no adequate regulatory framework or a competition agency to deal with them.

These cartels do not operate only in the goods sector, such as cement, steel and other intermediates, there are a large number of cartels in the transport business. These exist at the local level, where truck unions force companies to send out goods only through their members and collect hafta as well. The same exporting industry also suffer from shipping liner cartels which carry their goods overseas. In fact even the goods that they import for consumption are artificially priced high due to similar cartels operating outside.

Turning to the problem of black marketing and hoarding, Mehta said: “The government at the centre speaks about taking strong action, but they can not do much. It is the states who have to implement the laws, and their track record is rather poor”. He added, “unless the central government rewards better performing states, the will to crack down on black marketers will remain merely on paper”.

In conclusion, Mehta said that the Government has to nationalize the export movement and counter the cynicism of people as to why an export-led growth strategy can lead to more jobs. In this context, it will be useful to set in motion the Inter State Trade Council, which was announced when the FTP was launched four years ago, but has not happened.

For further information please contact:
Pradeep S Mehta, psm@cuts.org +91 09829013131
Bipul Chatterji, bc@cuts.org +91 09829285921

Subsidisation Process Should Not Distort the Level Paying Field: CUTS

New Delhi, April 04, 2008

CUTS International, a leading economic policy research and advocacy NGO, has expressed concern over the lack of competitive neutrality in enabling the private sector to market petroleum goods in the market.

In a press release issued here today, CUTS Secretary General, Pradeep S Mehta, said that shutting down of marketing outlets by private companies such as Reliance and Shell is a very serious issue and may adversely affect the level of private investment not only in oil, but in other sectors as well.

“It is socially justified to provide subsidies to curb high prices. But at the same time, subsidies should be given in a transparent and non-discriminatory manner without having any harmful effect on the productive as well as allocative efficiency in the sector” said Mehta

CUTS has stated that in the international market, crude oil price has crossed USD 110 per barrel. Given that oil price at the consumer end is under regulation, all oil companies (including publicly owned) are loosing Rs. 8 to 10 per litre on petrol as well as on diesel. It is not possible for any of the companies to continue with business with this huge loss. The only option is to increase the price, if no subsidy is provided.

“If the government has decided to keep the petroleum prices at the same level, it should support all companies by giving justified amount of subsidy. Private companies are meeting the required norms and efficiency targets, therefore, they equally deserve the same subsidy”, added Mehta.

CUTS has asked that such discrimination would be against the spirit of fair competition. Policy requires the government as well as regulator to create a level playing field for operators to foster competition in the sector.

“Since the operators have moved the Petroleum and Natural Gas Regulatory Board (PNGRB), it is for the Board to initiate action under the section 11 of PNGRB Act dealing with unfair trade practices”, Mehta added.

CUTS has also pointed out that the consumer choice should be restricted by forcing them to purchase the product only from the public sector companies. Government should encourage competition and efficiency and targeting benefit to the ultimate users in the sector.

For further information please contact:

Pradeep S Mehta, psm@cuts.org +91 9810206633/9829013131
Rajesh Kumar, rk2@cuts.org +91 9887905287