New Delhi: Finance minister Arun Jaitley on Thursday called for a level playing field between the private and the public sectors pointing out that the latter runs the risk of becoming non-competitive in the face of excessive regulations and outdated legal framework.
Citing examples of the aviation, petroleum, mining and shipping industries, the finance minister said regulations were needed when the state-run enterprises functioned in a monopolistic set up but these are now becoming a constraint.
Jaitley was speaking at a conference organized by the Comptroller and Auditor General of India (CAG).
Calling for a rethink by the judiciary, CAG and the government in their mindset to ensure state run firms do not lose their competitiveness, Jaitley said attention needs to be now paid on the legal regime governing these firms.
“ Post-1991, when we started the de-licensing and we opened sectors to the private sector and large number of cases went beyond private sector and opened up to foreign investors. Now, in sectors where there are public sector players and private sector players, the environment for functioning of the two is entirely different,” Jaitley said. “One’s transactions are audited by you and others are not. One has to give contract purely on tendering, others need not. One can go to the campus to do direct recruitment, others have to hold examination and settle for the next best,” he said.
This legal regime was not only fixed by the government but also through judicial pronouncements, which said that the public sector are also instrumentalities of the state and therefore have to be bound by various constitutional provisions, the finance minister added.
“It was doing good when they were functioning in monopoly because it added a sense of responsibility. But if a public sector and a private sector airline has to function in two different sets of regulations, and a public sector shipping company and private sector shipping company, if the shipping cycle is high, and the shipping company wants to sell a ship by the time the public sector company sells the ship, the shipping cycle itself will get over,” Jaitley said.
He, however, acknowledged that given these state-run enterprises spend public money, level playing fields will come with their own dangers.