India seeing multiple monopolistic trends: Prevention better than cure

India seeing multiple monopolistic trends: Prevention better than cure

• By Staff Writer

India seeing multiple monopolistic trends: Prevention better than cure

Capitalism works better from each perspective when economic determination makers are forced to share energy with those that can be affected by these choices. -- Bernie Frank

Bernie Frank along with Chris Dodd authored the famous Dodd-Frank Report, which frame regulations for the monetary trade following the 2008 Global Financial Crisis. A major lesson from the GFC, which led to the Great Recession, is that lack of proper regulation in the financial sector can lead to excesses culminating in systemic issues impacting your complete economic system.

When companies grow too large in an unregulated surrounding, and risky economic choices are made with short-term objectives, these companies can collapse inflicting systemic failures. Economic decision-making by a few large players can impact the livelihood of millions of people who have nothing to do with these choices.

Capitalism promotes competition. Competitive markets benefit all stakeholders. But capitalism needs effective regulation.Crony capitalism can do great damage not only to an economy but also to the democratic political system. That’s why economists argue for prevention of monopolies.

This is the age of mega corporations. The market-cap of FAANGs – Facebook, Apple, Amazon, Netflix and Google (Alphabet) – is around $5 trillion.The recent joint party report by the US Congress accused Google, Amazon, Facebook and Apple of monopolistic actions. Anti-monopoly legislation in the US has a great track record of breaking up potential monopolies.

Size alone poses no drawback

Liberalisation enabled successful Indian firms to develop. Some of these big companies have contributed considerably to India’s financial growth and improvement. For instance, TCS, which has grown to become the second most valuable company in India with a market cap of around Rs 8 lakh crore, now employs extra than 450,000 employees – 2 lakh more than that of SBI.

Companies like TCS have grown large in a highly competitive surroundings and pose no menace.

Regulators must be extra-vigilant

India continues to be a vibrant aggressive economic system. But the rising monopoly developments in some segments are disturbing signals. This emerging monopoly trends are the consequences of many factors. Shortsighted regulators, governments trying to squeeze most revenue from the trade and a judiciary interpreting the law in letter rather than looking at the issue from a holistic perspective… all have contributed to this undesirable development.

Many telecom companies in India have gone bankrupt contributing to the rising NPAs of India’s fragile banking system. The telecom bankruptcy is largely the consequence of the cut-throat competition unleashed in the industry by RIL Jio’s price war.

But the CCI rejected the case and gave a ruling that RIL Jio is not a dominant participant. Now, Jio has a dominant market share of extra than 35% and is the one worthwhile agency within the trade.

The Indian economy is likely to emerge strong post-Covid with sharp rebound in financial progress. Sustained excessive progress is crucial for addressing the challenges that the nation face. A competitive market economic alone can ship sustained excessive progress .

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