ARTICLES FROM CUTS

Why a steel regulator makes little sense

Published: Business Line, 17 December 2004
By Pradeep S. Mehta

The proposal to set up a steel regulator is mainly in response to the lobby of the builders who face a double-whammy due to the moves of both the cement and the steel industry. The way forward is not a steel regulator, but to move the agenda for establishing the Competition Commission of India at the earliest.

THE proposal by the Steel Minister, Mr Ram Vilas Paswan, to set up a steel regulator is ludicrous, to say the least. Nowhere in the world, there is a regulator for a commodity or a product, or for that matter in the steel sector.

Independent regulation is usually the form adopted only for the service sector, for several reasons which are not akin to goods sector.

The only exception is perhaps coal, which has to be treated under the rubric of energy.

Market distortions in any goods sector are best pre-empted or regulated by a combination of trade and industrial policy instruments to be used by the government branch administering the sector or through action by a competition authority.

In the case of India, it is the Steel Ministry that is required to pre-empt the anti-competitive situation through policy responses, such as by strategically lowering tariffs or encouraging more production.

Even encouraging substitution can balance the demand, such as the use of plastic or aluminium or concrete structures instead of steel. Second, by ensuring that the industrial policy governing the complex steel sector is managed in such a manner that there is better industrial democracy and distortions checked.

Lastly, as a large amount of production is in the public sector, the Government can intervene directly by policy directions to SAIL, a big player in India.

SAIL has a market share of 30.8 per cent of the total capacity in India. And if prices need to be regulated, the Essential Commodities Act can also be used.

Surprisingly, the public sector steel units are in league with the private sector. The new association: the Indian Steel Alliance, can also behave like a cartel, if not already doing so.

If that has to be looked into then it is the Monopolies and Restrictive Trade Practices Commission, but that is currently facing a sunset. The new competition authority is in a limbo.

Steel is one product which has been addressed in a research project: "Functional Competition Policy for India" being implemented by CUTS under the guidance of renowned economic, legal and business experts in India.

Various other goods and services sectors are also being examined to see how anti-competitive practices harm our economy.

Steel is quite a heterogenous product industry. It comprises thousands of products varying in shape and chemistry with distinctly different applications as also technology of production.

The steel market is fragmented and the demand is highly price inelastic. Integrated steel mills are capital intensive, infrastructure- and basic mineral-dependent. The smaller ones are not so, and are dependent on scrap or intermediate products produced elsewhere, not withstanding the import of war scrap, which has occupied newspaper columns recently.

Intra-industry competition is complex due to merchant operations where a buyer of an intermediate product can compete with the mill producing that in the market for the finished product.

The pricing issues relating to the intermediate product has been the bone of contention where the producers of the same are being accused of adopting unfair means to squeeze the merchant mills.

Producers of hot-rolled coils (HRCs) who also make downstream products like cold rolled coils and galvanised plain and corrugated sheets etc. resort to discriminatory pricing maintaining low differential between HRC and CRC, and even on other downstream products.

If the price differential between these products is lower than the cost of conversion of HRC into downstream products for a merchant mill, its entire economics goes for a six.

This is a common and tactical pricing policy followed normally by integrated mills to prevent excess competition in their downstream products market and also excessive capacity build up in the merchant mill sector.

The intra - industry issues of this kind have attracted greater attention in recent times.

The government has been sensitive to the ultimate consumers of steel by taking proactive action to arrest price jumps. In the past, the government had also taken highly protective measures to protect the interests of the steel makers. For example, the merchant mills producing CRC, GP/GC and even steel tubes have, in fact, been hurt by what they describe as undue protection provided to the HRC manufacturers by high import duty, non-tariff import barriers like floor prices, etc.

The Government was doing so to prevent a financial downturn for the HRC producers in the face of a global crisis in the industry, especially considering the fact that these facilities require huge capital investment and employ large number of workers.

So much for the background. The current demand for a steel regulator has been mainly made by the Builders Association of India (BAI). In the past, it had dealt with the cement cartel in more imaginative ways. First, by boycotting and, second, by lobbying for lower tariffs. In the case of steel, another basic input for construction, the BAI has argued the need for regulation to control runaway inflation in steel prices. In June, they demonstrated that steel prices have nearly doubled, from Rs 14,000 a tonne in January 2003 to Rs 27,000 in May 2004.

The BAI stated that there is no mismatch in demand and supply, nor a steep increase in inputs, and hence this price increase doesn't make any sense. It demanded that the government should prevent steel manufacturers from forming cartels and exploiting the market.

On the other hand, another victim, the Cold Rolled Steel Manufacturers Association, argued against a regulator on the lines of what I have stated above. Their advocacy was to use trade policy measures to curb the price gouging by the steel manufacturers: reduce import duties on intermediate products such as HR coils and billets up to 5 per cent.

On billets, which are a basic re-rollable steel material, the duty reduction will help the local downstream steel industry to be able to produce HR coils, as there is a surplus capacity in both long- and flat-finished steel goods.

Mr Paswan's reaction is mainly in response to the lobby of the builders who face a double-whammy due to the shenanigans of both the cement and the steel industry.

The way forward is not a steel regulator, but to move the agenda for establishing the Competition Commission of India at the earliest. Then, to provide the Commission with human and financial resources to deal with the problem.

Unfortunately, the agenda is in a limbo, on a ridiculous issue of choosing between a retired judge or a retired bureaucrat as its head. Better than either would be a competent person who can cope with the rigours of taming a marketplace.

Local problems need local solutions

Published: Economic Times, 10 December 2004
By Pradeep S. Mehta

Anti-competitive business practices are rampant at the state level and we need state-level competition agencies, backed by appropriate laws, to tackle them.

To achieve progress and the elusive 8% growth, it is important that all policies are coherent with the singular goal of achieving a better market place.

Indeed, many of our central government policies are framed and implemented to promote competition, such as regulatory policies in the utility sector, or using import policy to offer competition.

One incongruent policy is that on small-scale reservations. Closely linked with it are the state government procurement policies, under which both price and purchase preference are awarded to both small-scale and other units in the state.

In the overall, all these restrictive trade practices affect our competitiveness to a large extent, and tragically remain unaddressed in the public discourse.

The CUTS research project, to develop a “functional competition policy for India”, discovered many interesting issues at the state level, which affect our competitiveness.

This is coupled with a huge number of regulatory failures. For instance, in one case in Rajasthan in late 1980s, the forest department tendered for purchase of barbed wire for fencing. A big percentage of this was to be procured only from the small-scale sector.

The local small units, who bid, formed a cartel and shared the supply order. To add insult to injury, the quality was hopeless. But the department was ‘forced’ to use the shoddy goods.

Similar to happenings at the central level, the construction sector is scandalously infested with collusive bidding at the state level too, without any regulation.

In the last piece, I had written about the flyover scam in Tamil Nadu, where contractors pooled up to share the contract at a considerable cost to the taxpayer. The scam had hit the state assembly, but nothing much came out of it.

Angered by the malicious process, the Rajasthan PWD minister announced in the assembly on July 20, 2004, that he will break all cartels, so that smaller contractors can bid for contracts. Nothing happened after, and it is now business as usual.

Such type of regulatory failures are galore in all our states. Hoping to break these cartels is as difficult as you and me travelling to the moon. What with the high levels of corruption among the responsible engineers, who are in cahoots to ensure higher ‘commissions’ from public works. One is reminded of what happened to Satyendra Dubey, after he blew the whistle on the contractor mafia in Bihar.

The mafia appears to dominate in most such businesses in the states, who indulge in all types of anti-competitive practices in collusion with politicians. In the area of goods transport, there is a mafia-led cartel in various places.

In March, 2004, ET reported of a truckers cartel operating in Baddi, Himachal Pradesh. Controlled by the local MLA, the truck union charges 30% higher on the Baddi-Delhi route and 15-20% on the Baddi-Mumbai route.

Trucks coming in with supplies, go back as empties, because they are not allowed to pick up freight, which only adds to the production costs. Further, new units are discouraged to establish factories in the area.

In a similar case in Alwar, Rajasthan, in the 1980s, the MRTP Commission had taken action against the local truck union, but to no avail. The local union was headed by an MLA, who later became a minister in the state.

Yet, on the cries of local industry, the district administration took action with the help of police and broke the cartel.

Another area which the research addressed is the state excise policy. This policy, purely under the state jurisdiction, generates the biggest revenue in the states, is often implemented in a manner that all liquor vends are auctioned annually.

Here too in many states, cartels operate and loot the consumers. The Beverage Manufacturers’ Association has been lobbying for uniformity but that is clearly an uphill task.

Other lobbies and ignorance are their enemies. On a query to a senior official in a state, his response was: “I care two hoots for consumers. My only consideration is to increase revenues”.

What a pity, because he did not realise that by promoting competition, the state would have protected consumer interest as well as increased revenues. One doesn’t need to be an economist to determine that when collusion takes place, bids are always suppressed.

No central law or authority can be used easily to curb the anti-competitive practices which exist in the retail sector. In Mumbai, the Pan Merchants Association decides and circulates a price list, which mandates members to sell at prices, which are higher than those printed.

This is a violation of the packaged commodities rules, but one cannot expect the weights and measures inspector to go around prosecuting every pan shop. Such type of practices need to be dealt with systemically by the state government, but no one bothers!

Tied sales is another menace. I wonder whether people remember the time when LPG suppliers insisted on the consumer buying the hot plate at twice the market price. In spite of an MRTP order and oil companies notices, the dealers hardly ever bothered to comply.

CUTS research showed another ubiquitous problem through out the country, with little effort by the state governments to curb it. Most private schools insist that students buy their uniform and stationery from either their own store or a nominated shop. Prices are usually high, and whenever a complaint is made, it is at the risk of the student being rusticated.

Most doctors and diagnostic centres are in league throughout the country, making that extra buck. While pharmaceutical companies ‘influence’ many doctors to prescribe their brands.

Finally, the very controversial cable TV sector.

At the consumer level, one has to deal with monopolies, which do not guarantee good service and escalate prices frequently. While Trai is dealing with the policy framework, they too have been exasperated with the situation at the ground level.

In a recent statement, the Trai has said that cable TV can best be regulated at the state level. But where is the legal framework, which can enable the states to deal with this and million other anti-competitive and anti-consumer practices? For a big country like India, we need state competition and regulatory institutions to deal with myriad competition abuses. Local problems need local solutions.

Do Telesales Spam Telecom Users?

Published: The Economic Times, 6 December, 2004
By Manish Agarwal

Everyone has the right to privacy. However, telesales in the form of unwanted and uninvited calls and SMS messages on telephones/cell phones are an intrusive nuisance. Imagine a situation when a subscriber is roaming outside the service area, he may have to pay roaming airtime charges on these unwanted calls answered. While consumers can refuse to take a phone call, which is often difficult, but they are also powerless over their text messages.

Tele-solicitation is an advertisement targeted even at non-listed or non-published telephones/cell phones obtained (presumably against some ‘consideration’) from the service providers or are ‘sold’ to advertising companies with whom the subscriber has had or has business dealings. Absence of a telemarketing law has opened up yet another window for corrupt practices.

What is even more alarming is the disclosure that telephone hucksters have caused American consumers loss of more than US$40bn a year due to telemarketing frauds. Telephone hucksters are playing on consumers’ financial vulnerabilities and economic uncertainty. Telephone hucksters offer loans on no-questions-asked-basis on payment of US$250 upfront. The subscribers do not get the promised loan and also loose US$250. The USA clamped telemarketing sales rules to tackle the problem and has also prosecuted offenders. Besides, a national “do-not-call” registry is maintained to stop unwanted calls.

In its consultation paper on “Issues Pertaining to Publishing of Telephone Directory and Directory Enquiry Services”, the Telecom Regulatory Authority of India (TRAI) had acknowledged, there are complaints that marketing companies use mobile numbers for sales promotions and subscribers are disturbed by these invasive, unwarranted calls. However, not publishing a telephone directory is a partial and reactive measure.

Clearly there is a need to put in place a law to regulate, prescribe and implement procedures for not only protecting privacy rights but also to pre-empt fraudulent designs of the telephone hucksters without charging the subscribers.

CUTS has taken up this matter with TRAI and Department of Telecommunications, Government of India to enact a law to regulate such practices.

Competitiveness Via Competition

Published: Economic Times, 23 November 2004
By Pradeep S. Mehta

Competition means that we should have several players in the market, trading fairly. It would also improve their competitiveness. Tragically, many policy makers and even economists do not understand the distinction between competition and competitiveness, thus skewing the debate. Competition does lead to better competitiveness but the reverse is not true.

Competitiveness means promoting a number of strong players churning out goods and services at the best quality and prices. But their behaviour can be anti-competitive through collusive practices and the like, as was illustrated earlier.
Therefore, the country needs an effective competition law to ensure that the market functions, and both consumers and the economy gain.

The government has now established a lean National Manufacturing Competitiveness Council, “to provide a continuing forum for policy interactions to energise and sustain the growth of the manufacturing industry”. It will be good if it can also examine how the lack of an effective competition law and policy affects our competitiveness, and recommend appropriate steps for correction.

Once again, it is important to understand the distinction between competition policy and competition law. Competition policy, which we do not have, needs to be a stated government intent on how it aims to promote competition in our economy.
It will envelop various other policies, viz., investment, trade, labour, consumer etc to ensure that wherever there are conflicts, decisions to promote competition would get priority. A good example of this is the continuous de-reservation in the SSI sector. A competition law is a market instrument to ensure that firms behave and trade in a fair manner. However, the competition law cannot be a panacea to cure all ills of the market place.

The marketplace comprises of enterprises, farmers and households. They are consuming a large number of goods and services. Their efficiency and competitiveness are thus determined by their input costs. When the new Competition Act 2002 was being debated, many business interests lobbied against it, for the valid fear that it might be a new avatar of the control regime’s MRTP Commission, and not a modern market regulator. This was grounded in the fact that once again like all our new regulatory bodies, we will have retirees manning the system, whose knowledge about economics and law is inadequate. Let’s take the telecom regulator as an example.

The CUTS research shows that the telecom sector’s phenomenal growth as a consequence of increasing competition is unfortunately true only to a partial extent.
The incumbent government operator: BSNL, which owns 60% share of the market, reports to the same ministry as Trai does. It gets a more favourable treatment from the government. While Trai, some of whose members and staff are former BSNL employees, too gives it a preferential treatment. One instance of BSNL’s status leading to anti-competitive outcomes: it operates an internet service and offers it to consumers as a package deal at a low cost vis-a-vis the charges on the use of the phone time.

However, consumers of other internet service providers, who obtain the service through BSNL’s landline network, are not able to get the same pulse rate as is being charged to BSNL’s internet consumers. Independent ISPs cannot therefore compete with BSNL. And they are fast losing their consumers.

Let me now turn to the goods sector particularly the raw material and intermediate goods sector, and how lack of competition affects our firms.

In many areas, there is a dominant player or if there are many, then they implicitly and/or explicitly behave in the same fashion. The chances of abuse are high in India due to high levels of concentration in many goods sectors. Let’s take the textile input sector for example. The textile and garment sector has a high growth potential following the demise of the WTO’s textile quota system by the end of this year. Of the two critical inputs: Reliance is the dominant player in the polyester staple fibre with a market share of 54%, while Grasim is the dominant player, almost a monopoly, in the viscose staple fibre with 91% of the market share. Per se they may not be indulging in anti-competitive practices but the possibility is distinct.

Considering the liberalisation of trade, if such dominant firms do indulge in anti-competitive practices, imports can offer an antidote. Of course this too would depend upon how they can get the tariffs ‘fixed’ favourably or ‘use’ the anti-dumping regime to take “engineered” actions.

Contrary to the belief of many economists, trade liberalisation is only a partial solution to competition problems in the market place. In this age of globalisation with pressures on tariff barriers, choice of goods has increased substantially.
However there is a catch in this. Increasingly firms world-wide enter into global cartels to exploit the market. Examining a small number of international cartels, which were discovered and prosecuted in the 1990s, a World Bank study has estimated that developing countries imported goods and services worth $81.1 billion per annum from these sectors, which would have collected monopoly rents in the range of $20-24 billion per annum. Another estimate showed that a cartel in bulk vitamins cost developing countries $3 billion during the 1990s. Of this the Indian industry paid overcharges of $25 million in that period, not a mean figure.

The subject of international cartels featured in the discussions on a multilateral framework on competition at the WTO as part of the Doha Round. Though negotiations on it have been stopped, it will be worthwhile to recall our SSI lobby’s plea for a multilateral agreement, because, “such an accord would result not only in improved market access for Indian products, but also help reduce the prices of raw materials where cartels operate”.

This adequately makes the point that an effective competition law, including international cooperation to deal with cross-border issues, will not only promote consumer welfare, but also business welfare, i.e., better competitiveness.

Unified licensing regime proposals — The wall of TRAI for new entrants

Published: Business Line, 18 November, 2004
By Prabhat Dayal, Manish Agarwal and Bipin Batra

THE Telecom Regulatory Authority of India (TRAI) is to finalise its recommendations on unified licensing regime (ULR) shortly.

The key objective of the ULR seems to be that of unhindered growth of new applications and services, leveraging on technological developments in the information and communication technology (ICT) sector.

However, a closer look at TRAI's recommendations reveals that the main objective is to ensure a level field and a no-worse-off (in fact, better-off) situation for existing NLD (national long distance) and ILD (international long distance) operators.

All other objectives, such as encouraging efficient small operators to cover less-developed areas in term of telecommunication facilities, easy entry for new operators and encouragement of new technology, have taken a back seat in the process.

While the recommendations outline several initiatives, there are certain concerns that need to be addressed.

First, the proposed entry fee of over Rs 107 crore for unified licence would be a huge entry barrier for new operators and also for those intending to upgrade to NLD-ILD services; it would only serve to protect existing NLD-ILD players. Integrated operators, such as Reliance and Bharti, are not required to pay any entry fee for unified licence.

In this context, it is worth noting that while access services (basic and cellular) have witnessed intense competition, the NLD-ILD segments have not; this despite the opening up of the sector.

This is primarily because of the high entry fee and prohibitive bank guarantees, limiting the number of NLD/ILD operators. Going by the recommendations, competition is again going to be limited because of the unfavourable and irrational entry barriers.

Though TRAI has proposed a gradual reduction in the entry fee from the recommended Rs 107-plus crore to Rs 30 lakh after five years, much of the reduction would happen only in the sixth year, when the entry fee would be reduced from the proposed Rs 32 crore to Rs 30 lakh.

The reduction would be asymmetrical, as much of it would happen only in the later years. Existing operators will thus be shielded from competition for five years and consumers denied the benefit of competition. This is unwarranted.

Besides, TRAI has recommended the following concessions for NLD-ILD operators:

The total benefit for NLD and ILD operators from these concessions is estimated at more than Rs 4,400 crore over a five-year period.

Estimated benefit for NLD and ILD operators
Combined market size of NLD & ILD operations (FY 2003-04)	Rs.9487 crore
Accrued benefits by way of reduction in license fees (9% of Rs.9487 crore)	Rs.854 crore per annum / Rs.4269 crore for five years
Relaxation of performance bank guarantee of Rs.50 crore per operator	Rs.150 crore for private operators alone
*Total estimated benefit (excluding relaxation given in rollout obligations)*	*Rs.4419 crore*

The recommendations are clearly loaded in favour of NLD-ILD operators. Compared to the Rs 4,400-crore relief package, the proposed reduction in entry fee to ease entry is a minuscule Rs 15 crore and Rs 3 crore, respectively, for NLD and ILD operators.

In India, there are only four NLD and five ILD operators compared to 621 and 360 respectively in the US, more than 20 in each segment in Australia and more than 10 in France and Chile. And with these recommendations, the NLD-ILD segment in India will continue to remain concentrated.

Given the likely trade-off between the objectives of easy entry and level playing-field, TRAI has focussed on the latter. Instead, suitable concessions to existing operators with lower entry fees would have served the purpose better.

Under no circumstance should concessions be accompanied by entry barriers to protect existing operators. Unfortunately, this is precisely what the regulator has done.

The entry fee should be brought down to Rs 30 lakh in the first year itself, rather than after five years. Delaying competition will not be in the interest of consumers.

While the proposal to allow niche operators to cover less-developed areas in terms of telecommunication facilities is a welcome step, the incentives given to them are wanting; the only worthwhile one being free entry.

They are subject to restrictions on use of technology but are expected to contribute revenues equal to those of other operators who function from lucrative areas and who are free to use any technology. This goes against the objective of encouraging small operators and would make their operations unviable.

There should be no licence fee for niche operators for an initial period of say, five years, after which there can be a review. Moreover, there should be no restriction on use of technology, else the areas from where they operate would continue to remain technologically backward.

Under licensing through authorisation, Internet service providers (ISPs) are allowed to provide restricted Internet telephony. However, the gross cost variation in simple authorisation ISP licence and unified licence may prompt many ISPs to terminate illegal traffic.

Already, there are complaints of a grey market in incoming ILD calls. ISPs may be encouraged to provide Internet telephony subject to payment of Rs 30 lakh as entry fees.

This is an opportunity to address all anomalies in the system and encourage growth of new technologies. However, the regulator has chosen to protect NLD/ILD operators and postpone the use of new technology for another five years. Last November, TRAI had initiated the first step, where access service licences were unified.

And, as a final step towards convergence, it has now come up with these recommendations. However, unless these concerns are taken into account, the proposed regime would not achieve its objectives.

Escape from unholy brotherhood

Published: Economic Times, 15 November, 2004
By Pradeep S. Mehta

One has to view the Naresh Chandra Committee's report on reforming the aviation sector in India through the lens of competition.

Among many, two crucial points which emerge are: first, how to regulate the natural monopolies, which all airports are, through an independent regulator. And second, the issue of allowing private airlines to fly on overseas routes in competition with other airlines.

If Indian airports are privatised or even corporatised, they can become strong competitors to other more attractive airports in the region to serve as a hub for people who catch connecting flights to other parts of the world.

Singapore, Kuala Lumpur and Bangkok are models to be emulated. If our airports in India can come close to any of these, the other issue of allowing private airlines will pale in significance, because the demand will rise hugely to allow several players in the market.

In its editorial (Sense on aviation, November 5), The Economic Times has rightly argued that our two national flag carriers are not incompetent, but have been made so by bureaucratic insouciance or even deliberately (to allow the private sector to consolidate) by not allowing them to acquire new aircraft.

The issue of radically changing our whole transport policy came up at a research meeting recently at Jaipur, in the context of developing a functional competition policy for India, organised by CUTS.

It is not only transport, but several other sectors and policy interface, which the project is engaged in. A transportation expert observed: “Any one sector cannot be viewed in isolation, but the government should formulate an inter-modal transport policy, by looking at the interconnectivity between rail, air, road and water transport systems.” (The logic of developing internationally competitive airports applies to sea ports as well.)

Similar arguments were made for the energy sector, which should again work out a single policy by combining the petroleum, gas, electricity and coal sectors. It does make eminent sense to do so, and such an agenda is doing the rounds in our policy circles. Unfortunately, all these sectors are under different ministries, and thus the turf issue comes up as the biggest hurdle right at the start.

It may not be such a hurdle if the UPA’s National Common Minimum Programme is implemented in letter and spirit. The NCMP states: “Competition, both domestic and external, will be deepened across industry with professionally run regulatory institutions in place to ensure that competition is free and fair.”

The Planning Commission is currently engaged in how to improve the regulatory framework, and the results should set new benchmarks for the government and its various branches to follow. There will, of course, be hiccups, what with the usual “the right hand does not know what the left hand is doing”. The Left will also be breathing down the government’s neck to maintain the status quo. But the point is to go on despite all that.

One such discouraging example is the Left-led hullabaloo on the recent fuel price hike. Even an ordinary reader like me, was aware that prices would go up, in spite of the petroleum minister’s assurance to the contrary a few weeks ago. I knew the international oil cartel, Opec, is increasing international prices of crude. This cartel is not subject to any competition discipline, but that is another story. However, I am quite puzzled on two counts:

If we have moved away from the administered price mechanism, why is the government making noises. It doesn’t do so for cement and many other commodities. Furthermore, there is a choice of petrol pumps belonging to different companies in my city or any other for that matter, but they all charge the same price. What the government needs to do is to, first, reduce the fiscal overburden, and second to ensure that petrol pumps sell at competitive prices.

For that we will need a better competition law than the current MRTP Act. We have one, the Competition Act, 2002, but that is languishing in the Supreme Court because of the issue of who should head it, rather than what should be the head’s qualities.

Talking about cartelisation, the entry of private airlines into the Indian market comes to mind. Indian Airlines colluded with them to charge identical fares.

With private airlines acquiring bigger fleets, the scene has changed drastically. Now, even the national carrier is coming up with innovative ways to beat competition. The story in the telecom sector is quite similar.

Compared with approaches of other reforming economies, we have decided to stick to a mixed-economy approach, i.e., to buttress our public sector units, and bring in competition through private players. That’s good, but will it guarantee fair play.

For instance, it was reported in August 2004, that the public sector Hindustan Latex Ltd (HLL) had colluded with five other private firms to put in a common price bid to the ministry of health for Copper-T, the female contraceptive device.

The price hike itself from the last year’s HLL’s offer price of Rs 13 per piece, to the current offer at Rs 25 a piece, nearly a 100% jump, was plainly confounding. In fact, the contract was won by a private player at the rate of only Rs 8 a piece last year!

Cartelisation occurs in our country in every possible sector, especially when there are a large number of players. The list is endless: cement, tyres and a slew of intermediate goods and services. Wherever there is competition and an oversupply, businesses collude to protect their profits, and end up indulging in profiteering.

Bid rigging in construction contracts is another pandemic in the country. For instance, at the Jaipur meet, one consumer activist shared that in Chennai, the bids for a package of overhead bridges was awarded to one party. In return, the party shared the lucrative over-priced contracts with the other bidders working as their sub-contractors.

All this costs a huge amount to the economy, and affects the competitiveness of our firms adversely. It is also a dampener for foreign investment flows.

Competition, regulation in TV channels distribution

Published: Business Line, 6 November, 2004
By Pradeep S. Mehta and Manish Agarwal

Transmission of TV signals has come a long way with the advancement in information and communication technology.

CABLE television was developed in the late 1940s in the US for communities unable to receive TV signals because of terrain or distance from TV stations. Cable TV operators located antennas in areas with good reception, picked up broadcast station signals and then distributed them by coaxial cable to subscribers.

Since then, transmission of TV signals has come a long way with the advancement in information and communication technology (ICT). Now several alternative delivery platforms for transmitting TV signals have emerged such as Direct-to-Home Services (DTH) and Internet protocol-based TV (IPTV). These distribution technologies are competing with cable TV operators to provide audio-visual services. In several countries the penetration rate of DTH is much higher than cable services and consumers have a fair choice between competing technologies.

Carriage of popular channels by competing distribution networks is essential for competing in the market. As such, the success of competition in the distribution chain largely depends on the non-discriminatory treatment of carriage of TV channels. Broadcasters may also face similar problems when distribution network operators refuse to carry their TV channels/programmes to subscribers' premises.

Sometimes broadcasters and distribution network operators vertically integrate to discriminate against competitors in the carriage or provision of signals. Vertical integration may improve efficiency as it reduces the transaction between upstream and downstream operations. But, at the same time, in certain circumstances it may be used to limit competition, which could take any of following forms:

Vertical price squeeze, which happens when a vertically integrated broadcaster increases the price of a TV channel for competing operators but maintains the same price for operator affiliates;

Exclusivity of content, whereby popular TV channels are denied to a competitor so as to promote broadcaster's own distribution network; and

Denial of carriage by a vertically integrated cable system of TV channel of the rival company.
To what extent can regulation help ensure fair competition and to what extent can the market be expected to ensure that competition is not thwarted?

The concern is that broadcasters may not provide content to rival platforms and this could affect competition in terms of price and quality of service.

Moreover, the issue has to be seen primarily from a consumer's perspective. If all channels are not available on one platform then a consumer may have to acquire more than one platform to view his/her favourite channels. If content, especially popular content, is exclusively available on one platform then there may not be effective competition.

In the US there is a 40 per cent limit on the number of channels that can be occupied by video programmers affiliated with a particular cable system. Moreover, vertically integrated cable companies are prohibited from discriminating against competitors in the distribution of satellite delivered programming. In Canada, a 2001 ruling by the Canadian Radio-Television and Telecommunications Commission (CRTC) reversed a long-standing policy that prevented cable companies from owning pay and specialty TV channels. At the same time, the CRTC laid down certain principles for the cable TV industry, such as:

All specialty and pay services should be supplied and distributed on fair and equitable terms.

Unaffiliated companies should get terms and conditions that are no less favourable than those with affiliates.
In India, the Telecom Regulatory Authority of India (TRAI) recently submitted its recommendations to the Government of India on broadcasting and distribution of TV channels. TRAI has recommended that every broadcaster shall provide signals of its TV channels on a non-discriminatory basis to all distributors of TV channels and no exclusivity would be permitted between broadcasters and distributors of TV channels.

Generally, TV channels are provided to all carriers and platforms to increase viewership for the purpose of earning maximum subscription fee as well as advertisement revenue. However, according to some, if all platforms carry the same content it will reduce competition and there will be no incentive to improve the content. The experience in the US suggests that regulation relating to non-discriminatory access can provide an effective stimulus to competition and improve the content. The FCC, after reviewing the impact of its programme access rules over 10 years, found that exclusivity prohibition has not reduced the incentives to create new or diverse programming. In view of all these, it is necessary that there are regulations in place to check if content is denied in a manner that stifles competition among competing distribution networks.

It is important that all distribution platforms are promoted so that they provide consumers with choice.

Press Note 18: A way out of imbroglio

Published: Business Line, 15 October, 2004,
By Pradeep S. Mehta

The Government is keen to scrap Press Note 18 as it believes that it is restricting fresh FDI flows. Indeed, there is merit in this, and one needs to take a dispassionate view. Tragically, no one is saying anything about the small investor, who could lose out in such a situation. This can be remedied. The government can ask the foreign investor to offer a market price, or shares, at the same value in the new venture to protect the small shareholder.

THE government issues press releases in thousands for disseminating information, but Press Note 18 is perhaps the only one that masquerades as a policy directive. The controversy surrounding Press Note 18 is both puzzling and amusing.

The Government has, through this note, banned foreign investors from setting up new ventures without getting a no-objection from the Indian partner. Even if there is some merit in the arguments of business entities for such rules, they only raise entry barriers, stifling investment, growth and competition.

In the bad old days of shortages, quotas and black-marketing, Bajaj Auto manufactured Vespa scooters in the country, facing little competition from Lambretta scooters. In the early 1980s, when the government liberalised the scooter manufacturing sector, Vespa offered two licences: One to Lohia Machines Ltd (later renamed LML) and the other to the state-owned AP Scooters Ltd, albeit for two different models.

Bajaj did not protest. It had no grounds to do so as its agreement with Vespa had ended and its scooters were being sold under the Bajaj brand name. Granted, Vespa did not have any financial stake in the two ventures, except to collect royalties on sale of scooters. The public sector AP Scooters shut down due to its own problems, while LML continued steadily, building up its market.

Over the next few years, several new two-wheelers came into the market. Consequently, the black-market collapsed and consumers could now walk into a dealer's shop and ride out on a new vehicle.

"Our most important consideration is the customer. An increase in collaborations automatically leads to more units, which means increased production. This suits the customer," said the then 43-year-old Rahul Bajaj in a magazine interview in December 1983.

If one looks at this statement of the phenomenally successful `Hamara Bajaj', no prizes for guessing why he runs such a successful business today, riding on the success of his two-wheeler range.

The Vespa story may not be typical of a foreign company starting a new venture while already having one with an Indian partner. But the lessons from the Vespa saga are fairly analogous. In spite of there being no valid agreement with Bajaj, it could have raised objections to the two new ventures. Or LML could have cornered the licence for itself rather than sharing it with AP Scooters. The other lesson that comes out is that India is a huge market and thus two (or more) licencees can co-exist peacefully.

The current debate does not address the issue of competition and the fact that the policy creates entry barriers, thus stifling investment flows and competition. Second, the debate also does not consider that if the foreign investor is happy with its existing partner, it would hardly need to float another venture with another partner. That is, unless the existing arrangement is unsuitable for several reasons, such as economies of scale, or that the partner is no longer capable.

Let us take another example. British American Tobacco Co owns about 31 per cent equity in ITC. BAT has been trying hard for many years to increase its shareholding but the move has been resisted by ITC'sother shareholders. Does this mean that BAT wishes to start another venture in India? On the contrary, BAT has further licensed more cigarette brands to ITC, thus cementing its relationship.

What is the merit in the arguments of the business world? Dr Amit Mitra, Secretary-General, FICCI, argues, in a signed article in a financial daily, that the "philosophy behind PN18 is to safeguard the interests of shareholders, small and large, and the investments of financial institutions and promoters against predatory investments in India by the parent MNC in the same line of business." It is difficult to see how PN18 will serve the interests of shareholders if the firm is not doing well due to an unrelated set of problems. That could, perhaps, be one of the reasons why a foreign investor may want to set up another venture without the existing partner, though in some cases, the investor may have questionable motives.

Dr Mitra goes on to say, and rightly, that: "Some of the totally one-sided terms that MNCs have imposed on their Indian JVs include restrictions on sourcing, pricing of components and exports; denial of separate brand identity; denial of copyrights and patents, etc."

Unfortunately, such terms are not `imposed' but `negotiated' between the foreign and the Indian partners. And what guarantee is there that similar conditions will not be imposed on the new partner? There is a level playing field, even for unfair terms!

This may not be the case if the foreign investor comes in with 100 per cent equity in a new venture, but tariff- and incentive-shopping can always spin off other variables on strategic grounds.

For regulating such unfair conditions, one needs a better policy response and application of the Competition Act, 2002.

The Government is keen to scrap PN18 as it believes that it is restricting fresh FDI flows. According to the Finance Minister, Mr P. Chidambaram, PN18 has outlived its relevance and there is a strong case for its review.

The Commerce Minister, Mr Kamal Nath, too feels that the government has to be less restrictive while seeking a level playing field for investors. The Planning Commission Deputy Chairman, Dr Montek Singh Ahluwalia, has suggested a sectoral approach for carve-outs, such as food processing, automobiles and pharma.

Indeed there is merit in these arguments, and thus one needs to take a dispassionate view. Tragically, no one is saying anything about the small investor, who could lose out in such a situation. This can be remedied in two ways: The government can ask the foreign investor to offer a market price, or shares, at the same value in the new venture to protect the small shareholder.

Second, Dr Mitra's suggestion can be accepted. Guidelines can be drafted highlighting the flexibilities in the PN18 policy. Accordingly, the government can take a liberal view of such situations through a case-by-case approach. But this can only be successful if there is some form of an independent review, and not a system where discretionary powers may be misused.

Engaging states in trade aspirations
Unless this happens, we’ll not be able to create a national movement

This year’s trade policy appears to be most ambitious amongst all previous policies as it aims to double India’s share in world trade to 1.5% by 2009. And accelerate development through an export-led strategy. However, this can succeed only when all stakeholders are involved in it. It is a pity that state governments have not been involved in the formulation of the new trade policy, without which we will not be able create a national movement which is so essential.

This becomes more crucial as nearly every state is also formulating its own industrial and trade policy. Rajasthan adopted a trade policy a few years ago, which set a target of 18% growth rate in exports. The new government will soon be formulating a new trade policy. Various other states too have been adopting trade and industrial policies to boost exports. In the 2003 Industrial Policy Statement of Gujarat, the government introduced special initiatives for 12 agricultural products, in consultation with APEDA.

However, some incentives have been provided in the new trade policy towards increasing state involvement through the Assist-ance to States for Infrastructure Development of Exports (ASIDE) programme. The promotional measures listed in the ASIDE programme include a suitable provision in the department of commerce’s annual budget for fund allocation to the states on the twin criteria of gross exports and the rate of growth of exports.

This amount will be available for a raft of activities: developing roads connecting production centres with ports; setting up of inland container depots and container freight stations; creation of new state-level export promotion industrial parks; equity participation in infrastructure projects; development of minor ports; setting up common effluent treatment facilities; stabilising power supply and so on.

This does reflect the realisation that there is a growing need for incentivising states’ export thrust. However, permeation of all this to the ground is yet to be seen. A substantial part of infrastructure-related policies fall within the jurisprudence of the Union List such as seaports and airports. Further, custom duties, tariffs and other revenue generation mechanisms in trade fall under the exclusive domain of the Centre.

The assessment of states’ comparative advantages has received a thrust in this new trade policy by special initiatives to promote towns of export excellence. However, there is little state-Centre formal cooperation in this domain. States also need to understand the contours of the international trading system operating under the WTO. A very small number of them have forayed in promoting WTO capacity building. For example, one of the objectives of the Industrial Policy Statement 2003 of Gujarat is “To equip the industries ... to meet with the challenges of WTO regime as also exploit the opportunities to their advantages”. Similarly, Karnataka and Rajasthan have stepped beyond rhetoric to set up institutions to work on capacity building on WTO issues.

• There is a growing need to incentivise the states’ export thrust
• Promoting the states as stakeholders calls for out-of-the-box thinking

There have been times when state governments have been wrathful of the WTO, often reflecting the views of their constituencies. In Andhra Pradesh, the WTO has been blamed for the low prices of cotton, the subsequent impoverishment and resultant farmer suicides. In this milieu, confused stakeholders fall prey to misconceptions. The role of state governments in India’s international trade policy thus needs to be rejuvenated. There is clear need for both WTO-related capacity building as well as capacity building for export promotion.

“How do you promote states to be active stakeholders in promoting international trade”, is a question that requires out-of-box thinking on the part of the department of commerce such as establishing a national trade policy council. This body will have representation from the states, various central ministries dealing with WTO issues, research institutions, business chambers, trade unions, parliamentarians, media and NGOs. Such a council will have two broad tracks of work programme: firstly the foreign trade policy and secondly, trade agreements at the multilateral, regional and bilateral levels. If nothing else, the council will be a good forum to allow people to let off their steam and thus aid the process of better understanding. This will not only make the life of the commerce ministry honchos easy, but promote a national movement to enhance our international trade.

Published: The Economic Times, New Delhi, 08 October, 2004
By Pradeep S. Mehta

The government headed by Dr Manmohan Singh speaks about 8% growth as something to aim for and achieve over the next few years, and reforming with Mungeri Lal’s face in mind.

The earlier government was aiming for a double digit growth, though they too swore by Mungeri Lal. However, the rate forecast by rating agencies like Moody’s is not too far from the more sceptical estimates of about 6.5%.

In the context of the mid-term review of the Tenth Plan, deputy chairman Montek Singh Ahluwalia too has been drawn into the debate, sounding the refrain that it will not be possible to achieve 8% growth in the balance period of the Tenth Plan.

Number-crunching will continue to dog the debate. There are various ways to skin a cat. Tragically very little attention is paid to measures which can expand the national income, such as by efficiency, conservation and savings.

On the basis of the estimated 10.4% rate in the third quarter of 2003-04, a jubilant former finance minister Jaswant Singh stated that 10% growth is sustainable; thus India was shining!

But the million dollar question which needs to be addressed is: has the economy done really well when actual figures are considered?

More importantly, could this rate of growth be sustained? The new government has taken a more sanguine approach to throwing about numbers, but it has to face the challenge of growth with equity.

It is a fact that our economy is still stuck at the 6-7% bar, and it is premature to claim that it has broken through this barrier.

Looking at the erratic behaviour of this year’s monsoon, can we expect to achieve a reasonable growth rate? Going by the experience of past years, the answer is a resounding No. This in itself makes an 8% growth rate difficult to achieve. To sustain it is all the more difficult a proposition.

According to more sanguine estimates, the Indian economy is expected to grow at an average rate of 6.5% in the coming years. Moody’s estimate is not far from the truth. But this too depends on how Dr Manmohan Singh manages the left parties.

Experts prescribe fiscal reforms, financial sector reforms, agricultural reforms, labour market reforms, foreign direct investment, investment in human and physical infrastructure, and reforms at the level of state governments to sustain high growth.

However, while productivity-enhancing measures are suggested to achieve a high growth rate, hardly any one talks about taking measures to curb wastages in the economy, which would contribute significantly to GDP.

If the government makes an effort to reduce wastage and usher in an era of good governance, a significant amount of GDP can be saved. A few issues:

Effective competition law: If the new competition law is effectively implemented, it could by itself contribute substantially to growth. A study in Australia has shown a gain of 5.5% of the GDP by effective implementation of competition measures, which included strengthening of the competition rules.

Non-merit subsidies: The subsidies on non-merit goods and services (such as in agriculture, irrigation, power, industries and transport) amounted to 10.7% of GDP (2001-02) or Rs 20,600 crore.

Poor delivery, with the undeserving getting a share, are some of the issues which need to be tackled urgently. Consequent savings are expected to be quite significant.

A system based on performance: Given the job security provided to government servants through Article 311, productivity level in government departments is quite low.

On the other hand the Fifth Pay Commission has raised the expenditure hugely without the concomitant pruning. It is imperative to set productivity norms and a performance-based management system, that rewards the good and punishes the bad.

Accountability: It is estimated that the government loses at least Rs 41,000 crore due to delays in more than 300 projects, which are all above Rs 20 crore.

Imagine the total cost of delays if all the central and state government projects are examined. Ensuring transparency and proper project management will help improve accountability and ensure timely implementation of works and will have a crucial multiplier effect on the whole economy.

Corruption: As per earlier estimates of Transparency International (India), Rs 26,728 crore is wasted every year due to corruption, and it is the poor who suffer the most.

It is argued that growth can be raised if institutions are made strong and decision-making is least arbitrary. It is imperative that systems are created to eliminate any discretionary power by outsourcing several government functions, and providing incentives to the anti-corruption squad, and so on.

Adulteration and counterfeiting: Action on adulteration and counterfeiting is ineffective. One estimate suggests that while the industry loses Rs 4,000 crore annually, the exchequer loses over Rs 2,000 crore. The loss to consumer will far exceed the sum total. The problem is widespread and prevalent in almost every industry.

Road safety: Economic cost to developing countries from road traffic mishaps has been estimated at 2-3% of GDP, and the effect in India will not be far from this mark. And there is no serious effort to reduce the same. Attention needs to be paid to improving road design and visibility of road signs, strictly enforcing laws on drunken driving, etc.

In conclusion, if these and other measures are implemented, the amount saved by the economy would be roughly around Rs 2,00,000 crore and lift the national income by 8.9% in one shot.

Even if the economy continues to grow at an average of 6-7%, one can imagine the additional income that would be generated because of a wider base as well as increase in efficiency that would follow from the above measures. And this will lead to a higher and sustainable growth rate.

True, this estimate is back-of-the-envelope, but it should not be way off the mark. Is anyone listening?

SEPTEMBER 16 is observed as the International Day for the preservation of the Ozone layer. Beginning in 1995, this day is observed, commemorating the date in 1987, on which the Montreal Protocol on 'Substance the deplete the Ozone layer' was signed. The ozone layer absorbs most of the harmful ultra-violet-B radiation from the sun. It also completely screens out lethal UV-C radiation. The ozone shield is essential. Depleting the ozone layer allows more UV-B to reach the earth.

The ozone layer over the Antarctic has steadily weakened since measurements started in the early 1980s. The problem is worst over this part due to the extremely cold atmosphere and the presence of polar stratosphere clouds. In September 2000, the area of the ozone hole reached a record 29 million sq. kilometers. This year, the area of the ozone hole has been about 25 million sq. km. While no hole has appeared elsewhere, the Arctic, spring has seen the ozone layer over the North Pole thin up by to 30%, while the depletion over Europe and other high latitudes varies between 5% and 30%.

A meeting of experts on the ozone layer was convened in 1977, after which UNEP and the World Meteorogical Organization (WMO) set up the Coordinating Committee of the Ozone Layer (CCOL) to periodically assess ozone depletion. Inter-governmental negotiations for an international agreement to phase out ozone depleting substances started in 1981 and concluded with the adoption of the Vienna Convention for the Protection of the Ozone Layer in March 1985. The Montreal Protocol on 'Substances that Deplete the Ozone Layer' was adopted in September 1987. Following the discovery of the Antarctic ozone hole in late 1985, governments recognised the need for stronger measures to reduce the production and consumption of a number of CFCs and several Halons. The Montreal Amendment of 1997 finalized the schedules for phasing out methyl bromide. The Beijing Amendment of 1999 included Bromo-chloro methane. It also introduced production controls on HCFCs (Hydro-chloro-flouro-carbons) as well as controls on trade with non-Parties.

Without the Protocol, by the year 2050 ozone depletion would rise to at least 50% in the northern hemisphere's mid latitudes and 70% in the southern mid latitudes, about 10 times worse than current levels. The implications of this would have been horrendous: 19 million more cases of non-melanoma cancer, 1.5 million cases of melanoma cancer, and 130 million more cases of eye cataracts. Ozone protection has been possible because science and industry have been able to develop alternatives to ozone depleting chemicals. Developed countries have ended the use of CFCs faster as anticipated. Substitutes have proved important in electronics.

Studies continue to confirm the adverse effects of UV-B radiation on the eyes, skin and immune system, including cortical cataract and skin cancer. Recent results continue to confirm the general consensus that solar UV negatively affects aquatic organisms. Global warming and enhanced UV-B radiation interact to affect a range of biogeochemical process including microbial activity, nutrient cycling and greenhouse gas emissions from soils.

Unfortunately, while most governments have ratified the Protocol, ratification of the amendments and their stronger control measures lag behind. Eleven countries have yet not ratified the ozone treaties, and many more have yet not ratified the London, Copenhagen, Montreal and Beijing Amendments. Some countries with economies in transition are having difficulty in complying with the Montreal Protocol.

In the US, CFCs are heavily taxed and the market price is high. As a result, some traders illegally sell new CFCs in the industrial countries every year in the guise of recycled substances or as exports to developing countries. In some countries CFCs are being replaced by HFCs, which have a large global warming potential.

The MDG on gender equality can be achieved by mainstreaming a gender perspective and promoting women's empowerment.

Deboshri Chatterjee from CUTS Centre for Consumer Action, Research & Training tells us more about how her organisation is doing it in Rajasthan, India….

Rajasthan has almost become synonymous with the low status of women, patriarchal society, feudal customs and values, social polarisation along caste lines, high illiteracy and extreme poverty.

The secondary status of women in Rajasthan coupled with an oppressive caste system and grinding poverty has robbed the women of their rights and a life of dignity, which were envisaged by the framers of the Constitution.

The issue of gender equality has acquired a global character and therefore, there is a need for the Civil Society to actively participate and enable the women to fight for their rights.

The United Nations has included the issue of gender mainstreaming in the Millennium Declaration and 'promoting gender equality and empowerment of women' is one of the Millennium Development Goals (MDGs).

As per the Declaration, progress will be monitored through promotion of gender equality and empowerment of women, reduction of child mortality and improvement of maternal mortality.

Improved gender sensitivity could be achieved by adopting a proactive approach towards achieving gender justice. Therefore achieving gender equality requires two complementary approaches--mainstreaming a gender perspective and promoting women's empowerment.

In addition the MDGs aim to eliminate the gender discrepancy in primary and secondary education by increasing opportunities for girls to attend school preferably by 2005, and at all levels by 2015.

The notion of gender perspective as developed by CUTS
Ever since its inception, Consumer Unity & Trust Society (CUTS) is pursuing people's sovereignty through community based action programmes at the grassroots level.

CUTS has picked up the issue of gender equality as one of the major concern. The development approaches initiated by CUTS seek to empower the weaker sections. The extracts of the success stories from the field is the best critique of the work done by this organisation.

The story of an illiterate, rural and backward caste woman, Ratni Bai, a living legend, who received the prize for women's creativity in rural life by the Women's World Summit Foundation based in Switzerland, explains it all.

Ratni Bai began her journey when she attended a chaupal baithak (meeting at the central place of a village) organised by CUTS. It was here, where she expressed her desire to be associated in the Rural Women's Empowerment Project (RWEP).

Her advocacy efforts with government agencies and Panchayati Raj Institutions(PRI) have resulted in the "construction of a school in her locality, frequent visits by health personnel and regular as well as proper distribution of essential items in fair price shops (under public distribution)."

The organisation over the years has conducted training for the grassroots workers on the issues of gender equity, legal rights, reproductive health, generic community problems, and the process of sustainable development.

Apart from the above, training programmes were also conducted for educating the women about the PRIs, encouragement of girl child education and medical health care system.

Efforts have been made for sensitising the larger community about the prevalence of violence against women and girl child. The organisation has established good network links through Self Help Groups (SHGs) and Community Based Organisations (CBOs) that work directly at the grassroots level.

CUTS has endeavored to create new spaces and support systems to sustain the process of empowerment and transformation of the society as a whole.

Gender perspective must cut across all the operational activities and be integrated into strategies. CUTS presents a good example in strengthening women's voice by approaching all the projects in relation to empowerment with a realistic expectation. Therefore it has been able to create a women's space within the community.

On the basis of past experience on the issue, CUTS aspires to set a powerful agenda of bringing discrimination against women to an end, for global partnership to fight poverty, offering a shared vision of a better world by 2015.

Every community has its own traditions and culture, and maintaining their form and attaining gender equality is a difficult task. Therefore the organisation intends to adopt a proactive approach to reach the millennium development goals and focus its efforts on creating a better society.

Economic empowerment
Women of Rajasthan are viewed as an economic liability in natal home and a burden in the marital home. Invisibility of women's work and lack of negotiating power has contributed to the perpetuation of negative image in the family, society and in politics.

Women will continue to experience the same kind of subjugation and injustice if they are not empowered to fight for their own rights.

CUTS has been working with women SHGs on micro credit for more than 12 years. In the year of 2004, CUTS initiated a project in partnership with NABARD on micro-credit through SHGs. This helped the women to improve their economic status and join the mainstream economic activities.

CUTS intends to incorporate a strategy, which will create employment opportunities, generate financial assistance schemes for encouraging small scale industries, sensitising women to fight for their rights through SHG's activities at times with or without the support of state government machinery.

Political participation
The real position of women in the society is reflected by their low participation rate in the legislative assembly of the state and Panchayat. Women can play a very important role with provision of 33 per cent reservation for them in Panchayati Raj and urban bodies.

But even when the women representatives are selected, by and large it's the men who dominate the proceedings.

CUTS intends to play an effective role by organising training workshops, exposure visits/study tours and mutual learning networks to educate women about their role in understanding their rights.

At the same time, the personal experience of women who have made difference in elected bodies and in public institutions may also be highlighted. Such information could be publicised and success stories of poor women, who have created role models for others, should be brought to the notice of common mass.

Media
Media can play a key role in fostering ideologies that support the vision of attaining gender equality as an essential goal of development. Hence CUTS intends to adopt a proactive stand to establish a balanced approach that acquires a mid way between ideologies of feminism and patriarchy. Therefore the organisation would help stem the tide against the prevalent society and hence equip women themselves to fight for their rights.

Conclusion
Social change is always difficult, particularly when the basic relations between men and women in families and societies are involved. The past several decades have seen greater attention and some progress towards the women empowerment.

There has been a growing recognition of how the rules governing men and women's opportunities, social endowments and behaviour affect the prospects for accelerated development and justice. The government acknowledges that though there are good laws, but their implementation is the biggest problem.

There is also a need for gender specific resources and capacity-building efforts. Improved gender sensitivity could be achieved by adopting a proactive approach towards achieving gender balance within the social system. Societies need their own solutions, grounded in a vision of justice and gender equality and consistent with their cultures and conditions, to provide a better life for both women and men.

Deboshri Chatterjee works with CUTS Centre for Consumer Action, Research & Training (CART) based in Jaipur, India as a Young Professional under the YP scheme of CAPART (Council for Advancement of People's Action and Rural Technology, under the aegis of Ministry of Rural Development, Govt. of India).

Estimated benefit for NLD and ILD operators