Atanu Dey On India's Development

Favorite Bits from the Archives: Competition

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Competition on the supply side is good if you are on the demand side, and competition on the demand side is good if you are on the supply side. Otherwise competition is evil. That is why governments of third world countries limit competition on the supply side — the better to extract rents from the economy.

The Nehruvian “licence permit quota control” raj limited competition so extract the trillions of dollars worth of rent (part of which ended up off-shore) and limited India’s real growth to 2 percent or so a year. There’s a danger of India sliding slowly back to the abyss of a Nehruvian economy. To the government, competition is evil.