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Russia: Time to Finance Infrastructure and Investment Projects in Africa

Kester Kenn Klomegah

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Over the past few years, Russian companies have shown an increasing interest towards investment and preparedness to compete with other foreign players in Africa, but they have also complained bitterly of lack of state financial support and investment credit guarantees from policy banks and money-lending institutions.

China, India and Japan, and more recently the United States have provided funds to support companies ready to carry out projects in various sectors in African countries.

This situation has sparked discussions among policy experts. For instance, Dr Martyn Davies, Chief Executive Officer of the South African based Frontier Advisory (Pty) Ltd, does not think that the Chinese model of financing various infrastructure and construction projects in Africa is replicable considering the current structure/nature of the Chinese policy banking system, adding that Russia’s banking sector operates quite differently.

There are now approximately 50 leading Chinese state-owned enterprises that are all Fortune 500 firms that are present in Africa, with the majority of these active in infrastructure and construction in Africa, he explained to Buziness Africa.

Explaining further, he said although the rapidity of and pervasiveness of their market entry into Africa has taken many by surprise, and the main factor that has assisted this speedy market engagement was that the projects were largely “de-risked” from a financial perspective.

Arguably the single greatest risk of contracting (with governments) in Africa is ultimately getting paid. In the case of the Chinese contracted projects, the Chinese state’s so-called policy banks have provided finance and have underwritten the infrastructure roll-out very often supported by sovereign guarantees from the recipient African state. No other (even development) banks have been willing to absorb such financial risks on infrastructure projects in Africa. This accounts for China’s “success” in building infrastructure in Africa in recent years, according to the academic professor.

“It is almost impossible for the model to be replicated in a true commercial sense. The only likelihood of similar financial structures arising is in the case of tied-aid for commercial purposes. I would argue that the strategy of China Inc. is resulting in a rethinking of how aid/developmental capital is being allocated or spent in Africa by other partners. This is especially the case with Japanese aid to Africa, with the Fifth Tokyo International Conference on African Development (TICAD) meeting and the commercial outcomes from it evidence of this,” Davies concluded assertively.

When the former Chinese President Hu Jintao delivered a speech at the opening ceremony of the Fifth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC), he indicated explicitly that “China will expand cooperation in investment and financing to support sustainable development in Africa. China provided $20 billion dollars of credit line to African countries to assist them in developing infrastructure, agriculture, manufacturing and small and medium-sized enterprises.”

Japan made a five-year commitment of $32 billion dollars in public and private funding to Africa, and the money to be used in areas prioritized as necessary for growth by the Fifth Tokyo International Conference on African Development (TICAD).

Japan’s new pledge is nearly four times larger than its last commitment to the group. The plan of action is ambitious. Japanese funds will help in a number of areas, including trade, infrastructure, private sector development, health and education, good governance and food production

Suffice to say that the United States, Britain, Brazil and India have followed concretely Chinese footsteps with financial commitment towards sustainable development projects in Africa. These steps have, indeed, made competition keen for bidding for available infrastructural projects on the continent.

During the official working meeting with Barack Obama, South African President Jacob Zuma told his colleague: “The United States’ strategy towards sub-Saharan Africa that you launched is well-timed to take advantage of this growing market. We look forward to strengthening the US-Africa partnership and we are pleased with the growing bilateral trade and investment.”

For example, there are 600 US companies operating in South Africa which have created in excess 150,000 jobs for local people. Many experts still believe that Russian authorities have to provide incentives.

Charles Robertson, Global Chief Economist at Renaissance Capital, thinks that the major problem is incentives. China has two major incentives to invest in Africa. First, China needs to buy resources, while Russia does not. Second, Chinese exports are suitable for Africa – whether it is textiles or iPads, goods made in China can be sold in Africa. Russia exports little except oil and has (roughly 2/3 of exports), steel and metals (which is either not cost effective to sell in Africa, or again is the same as Africa is selling) and military weapons.

“Most importantly, Chinese firms see African growth as benefiting China, while Russia has less to gain from this. There is little incentive for Russian firms to operate in Africa…though Renaissance Capital sees opportunities, as does Rusal, and a few others. The problem is not investment credits or guarantees,” Robertson pointed out.

In his objective views, Russia has a northern hemisphere focus. And that explains why Russia has shown low financial commitment in its foregn policy implementation in Africa as compared to countries such as Japan, India and China.

According to Jimmy Saruchera, a Director at Schmooze Frontier Markets, an investment fund that works to support small-and-medium sized businesses in new emerging markets, suggested that both Russia and Africa needed work on a good trade policy, stable and transparent institutions are the fundamental ingredients, then tools such as credits and export guarantees can be more effective.

Dr Scott Firsing, a visiting Bradlow fellow at the South African Institute for International Affairs (SAIIA) and a senior lecturer in international studies at Monash University in Johannesburg, said “the absence of export credit guarantees can be a real obstacle to some in countries such as Russia because there are businesses and policy holders that look for these guarantees to help alleviate the fear of doing business in high risk markets like Africa.”

Export credit guarantees show the exporter protection against the main risks, which include political and commercial risks, in places such as Africa. This has been very successful for countries like South Africa, which even manage to stockpile cash over time due to the premiums being more than the payouts. Moreover, one can deduce that without such cover or this ‘safety net’, South African companies might have never taken such risks or would have been unable to bid or win contracts in developing economics, according to his explanation to Buziness Africa.

“I would suggest such a move that Russia has to design a policy strategy. One of China’s policy banks, the Chinese Development Bank (CDB) is the country’s largest lender for funding acquisitions and investments overseas, totaling more than its four main commericial banks. This has helped expand the overseas presence of Chinese companies like ZTE Corp and Huawei that wouldn’t have been previously unlikely without the assistance from such a policy bank,” he added.

According to Dr Firsing: a similar statement can be made of the importance of American institutions like their Export-Import Bank that supports American companies and their expansion into African markets. Obama’s latest African Power Initiative sees the Export-Import Bank granting up to US$5 billion in support of U.S. exports for the development of power projects across sub-Saharan Africa. Russia can learn a lot from the approach of these countries.

Professor David H. Shinn, an Adjunct Professor at the Elliott School of International Affairs George, Washington University, suspects that Russia’s problem goes well beyond investment credits and export credit guarantees. Just look at Russian trade with Africa. It is embarrassingly low. Turkey has twice as much trade with Africa as Russia. Most Russian investment in Africa goes into large energy and mineral projects. China is investing in just about everything.

Professor Shinn, who was a former U.S. ambassador to Ethiopia (1996-99) and Burkina Faso (1987-90), wrote in an email interview to Buziness Africa, that lack of or weakness of Russian government incentives for investing outside Russia seems to be the significant part of its African policy problem, that compared, China does a lot of project financing in Africa.

He argued that western countries are also at a disadvantage because there is much more separation between the government and the private sector and there is no equivalent government state-owned sector, at least, not in the United States. Most Chinese investment in Africa occurs with the large state-owned companies, which work closely with the government. President Barack Obama recently tried to energize the US private sector in Africa during his recent visit, especially with the Power Africa initiative.

Interestingly, Russian policy experts have repeatedly called for state support for corporate investment initiatives as well as helping systematically private entrepreneurs to make strong strategic inroads into mutually viable investment sectors and to raise economic presence in Africa.

“Until recently, Africa was poorly represented in macro-economic forecasting and research, especially in terms of Russian-African relations,” wrote Professor Aleksei Vasiliev and Evgeny Korendiasov both from the Russian Academy of Sciences, Institute of African Studies (IAS). Vasiliev is the current Director of the IAS and former Special Presidential Envoy to African Countries while Korendiasov retired Russian Ambassador and now the Head of the Department for Russian-African Research at the IAS.

They both authored an article published in June that Russia has officially declared promoting relations with Africa a priority goal. Assurances made by Russian officials in their statements that Africa is “in the mainstream of Russia’s foreign policy” have not been substantiated by systematic practical activities, and the development of relations between Russia and Africa has so far nothing to boast about.

According to the academic researchers, currently the scope for Russian-African partnership is significantly expanding and of the 48 countries in Sub-Saharan Africa, Western experts consider 24 to be democratic countries.They both argued that “through large-scale and purposeful participation in the international development assistance, Russia strives to advance its foreign policy priorities and strengthen the positions of Russian business in the African economic space.”

But, they pointed out unreservedly that the situation in Russian-African foreign trade will change for the better, if Russian industry undergoes technological modernization, the state provides Russian businessmen systematic and meaningful support, and small and medium businesses receive wider access to foreign economic cooperation with Africa.

Among other policy recommendations, they stressed “defining clear guidelines and priorities of Russian policy towards Africa, creating conditions for the promotion of Russian goods and investments in African markets, setting up mechanisms of financial support by the state of export and investment projects which is a compulsory condition for successful Russian business activity on the African continent and introducing tariff preferences for trade with African partners.”

Kester Kenn Klomegah is an independent researcher and writer on African affairs in the EurAsian region and former Soviet republics. He wrote previously for African Press Agency, African Executive and Inter Press Service. Earlier, he had worked for The Moscow Times, a reputable English newspaper. Klomegah taught part-time at the Moscow Institute of Modern Journalism. He studied international journalism and mass communication, and later spent a year at the Moscow State Institute of International Relations. He co-authored a book “AIDS/HIV and Men: Taking Risk or Taking Responsibility” published by the London-based Panos Institute. In 2004 and again in 2009, he won the Golden Word Prize for a series of analytical articles on Russia's economic cooperation with African countries.

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Economy

Ports of Pakistan and Gwadar’s Potential as a Transshipment Port

Dr. Anjum Sarfraz

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The oceans play an important role in transportation of cargo in the world over, being the cheapest mode of transportation as compared to rail, road and air. According to International Chamber of Shipping, 90% of world trade is carried by 50,000 merchant ships.  It includes all types of cargo like machinery, vehicles, different types of liquids, construction material, food items, and livestock.  These ships need ports to be docked for loading and discharging of cargo. Countries having all weather deep draught ports, equipped with state of the art cranes and associated equipment to handle cargo efficiently are mammoth source of advancement of economy.

Seaports are also instrumental for generating employment opportunities through effects associated with these like crew for operations and personnel  to work in repair workshops for sea going ships and different types of  harbor vessels such of tugs, pilot boats, dredging vessels, and  different  types of other equipment .  Logistics activities such as storing, distribution, container stacking, food arrangements for employees. Personnel for inspection and custom requirements. Ports attract investors to establish industries in the vicinity to import raw material and export finished goods. It is observed that large cities are located closer to the bigger ports. Infect ports can be the real pillars of economic development of a country.

Major considerations for a port are; less adverse weather affects, bigger ships (deep draught and longer in length) can be docked, efficiently handling of loading and unloading of cargo.   In addition back yard area to handle cargo should have sufficient space. Hinterland connections should facilitate smooth flow of cargo to and from the port. Pakistan has about 1120 Km coast with three commercial ports. Karachi port was developed in 1887 and is being operated by Karachi Port Trust (KPT).  It has a total 33 berths. Out of these, three oil piers for handling liquid cargo like different types of oil, molasses etc. Ships up to 12.5 meters draught can be berthed. Out of remaining 30, three each on East and West wharves are for handling containers which have been leased to Pakistan International Container Terminal (PICT) and Karachi International Container Terminal (KICT) following Land Lord Port Policy. 

These companies install their own cranes, other equipment and have their own employees for operations. The ownership remains with the Port Authorities. Container carriers up to 11.5 m draught can be docked. Remaining berths can handle bulk carriers and other type of ships having comparatively shallow draught up to 10 meters.   The recently built extension of Karachi port has quay wall of 1500 meters which can dock mostly container ships up to 16 meter draught.  These berths have been given on lease to South Asia Pakistan Terminal (SAPT) for operations. It is a modern facility equipped with state of the art cranes and other associated equipment.  Karachi port has handled 55million tons of cargo in 2017-18, which was about 55% percent of the total cargo of Pakistan. However, this port is now in the center of the busy city Karachi, therefore cargo flow to and from the port has become very problematic. Alternate routes needs to be explored. It is suggested that a pipe line for liquid cargo from oil piers at Kemari to an appropriate location outside limits of Karachi may be constructed. From here oil tankers may load the liquid cargo for upcountry. For containerized and other cargo a separate road may be built from Karachi port to link high way. In the meantime only smaller 6 to 8 wheeler trucks may be allowed to take cargo to a separately built yard outside the limits of Karachi from where bigger trucks can take the cargo to and from up country.

The second port is Bin Qasim which is also located in Karachi. It has seven berths; ships up to 12 meters draught can be docked. It is being operated by Port Qasim Authority (PQA). It was initially built to provide iron ore to Karachi Steel Mills. Now it can handle all types of cargo including containers, oil and Liquefied Natural Gas (LNG).  In the year 2017-18 it has handled 45 million tons of cargo which was 45 % of the total cargo.  Bin Qasim port has sufficient spaces to build new berths when required. Its   connection with hinterland is not posing problems because it is located well outside the main city. These two ports are meeting the requirements to handle all types of import and export of Pakistan which is presently around 100 million tons and have capacity to meet future requirements as well.

3.The third commercial port is Gwadar which is located on the Western edge of the coast in the province of Balochistan about 533 km from Karachi. It occupies a strategic location at the entrance of Persian Gulf overlooking the Arabian Sea. It is just outside the choke point, Straits of Hormuz, where 17 million barrels of oil passes every day. In 1997 the government appointed Task Force identified this fishing harbor to be developed as a commercial port.   The project could not be started due to economic sanctions after nuclear detonation in May 1998. It started in 2002 and first phase was completed 2007.  It has 1000 meter quay wall to dock 14.5 meter draught ships. It has 3 multipurpose berths one RO – RO facility and one service berth.  First ship was docked carrying 70,000 metric tons of wheat in March 2008.   Originally it was built to supplement other two ports.

Now it has taken shape as key component of the China Pakistan Economic Corridor (CPEC).    It has been leased to China Overseas Port Holding Company (COPHC) for 40 years. It is designed to handle cargo of Chinese Western province, Xinjiang and at a later stage cargo of land lock countries, Afghanistan, Turkmenistan, Uzbekistan, and Tajikistan. Presently cargo of Afghanistan is being handled by Karachi and port Qasim. Gwadar port is ready for operation about 11 years before but it has not been operated to its optimum capacity yet. Mainly because the designed road and rail infrastructure up to Khunjerab pass has not been fully developed.  However it meets the requirements to be operated as a Transshipment Port in addition to CPEC cargo. 

The transshipment concept refers to the shipment of containers/ goods to an intermediate port before being taken to the final destination.  It plays a critical role due to infrastructure limitations in smaller sea ports and shipping lines strategies to have minimum ports of calls of their bigger ships.  Now days an average, a container is handled 3 to 4 times between the first port of loading and the final port of discharge.  The concept of transshipment operation is increasing very fast. Gwadar port because of its strategic location closer to Persian Gulf, ability to handle deep draught ships, short access channel of only 4.7 km long, comparatively low cost labor, sufficient area to stack containers and other cargo, can be equipped to operate as a transshipment port. Bigger ships coming and going to Persian Gulf, and bound for Indian Ocean littorals can discharge their cargo at Gwadar and smaller ships can take these to the ports of destination.

It is pertinent to mention that Singapore area wise is a small country, but its Port of Singapore is the world’s biggest transshipment port as well as the busiest port after Shanghai. It handled 36.6 million containers in 2018. The government of Pakistan Ministry of Maritime Affairs may consider the possibility of operating Gwadar as a transshipment port. It will certainly act as source of enhancement of economy and to provide job opportunities especially to residents of Balochistan.   

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Economy

Uber & the Neoliberal State

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Everyday in my local papers, I read stories with headlines like “Subway Ridership Dropped Again in New York as Passengers Flee to Uber.”  AMNY, in its daily Tweet compilation section, generally devotes at least half of its selections to posts bashing the subway and bus system.  In the midst of the hangover that was last week’s Uber IPO (in which it immediately lost 8% of its value), it would be appropriate to contemplate the intersection of Uber (and its ugly stepsister Lyft) and the government.

In the shadow of the Great Depression and WWII, under the Administrations of the multimillionaire Franklin Roosevelt and the no-nonsense Republican Dwight Eisenhower, the federal government invested the equivalent of football fields full of cash on infrastructure projects like the Interstate Highway System (which cost half a trillion in today’s dollars).  States and cities likewise undertook great transportation schemes.  Between the 1920s and 1960s, Robert Moses funded 413 mi. of parkways and 13 bridges for NYC through, among other things, local tolls. 

This spirit of investing in the mobility of American citizens and goods gradually died off with the rise of neoliberalism in the 1970s and 1980s; federal spending for transportation infrastructure spending has been in decline since Lyndon Johnson’s Great Society.  The sea change was most spectacularly evidenced on Oct 22 1981, when President Reagan fired and blacklisted 11,345 striking federal air traffic controllers. Cue to the present… The American Society of Civil Engineers has given America’s infrastructure a dismal grade of D+ since 2013.  Trump on the 2016 campaign trail said that, “Our airports are like from a third world country.”

Governmental abdication in regards to public transportation has created a vacuum that the private sector is now trying to fill. This is problematic for many reasons. Bereft of the full-time employee status and union membership of public transit employees, Uber and Lyft drivers, as “independent contractors”, are treated like sharecroppers, with no minimum wage or pension/healthcare plans.  Infrastructure underfunding leads to lost opportunities for construction companies and their suppliers, which costs the economy money and jobs.  Uber and Lyft, by contrast, contribute nothing to the roads, tunnels and bridges that they use, other than tolls and the income that they don’t shield via elaborate tax evasion schemes… That and a nearly threefold increase in congestion, which hurts shipping and personal drivers’ commutes. Safety laws are frequently broken by Uber and its drivers, who undergo nothing more than a basic background screening, and receive no substantive training, prior to being hired.  The secluded, close-quarters nature of the rideshare template has led to many incidences of sexual assault and harassment for drivers and riders alike (by contrast, bus and yellow-cab drivers are generally shielded from their clients by bulletproof glass).

The privatization of transit also creates a commuter caste system, in which affluent citizens can spend $20 on a quick Uber ride to work, while poorer people must rely on perpetually-delayed trains, anxiously waiting on train platforms that are often literally falling apart due to neglect.  This problem extends far beyond rideshare apps.  For years, Elon Musk has been unsuccessfully trying to sell various municipalities on the concept of the experimental hyperloop, a pricier, less efficient version of a subway.  Hyperloop trains of the future will supposedly be able to travel at 700 mph… but they can only carry 28 people at a time!  So Musk wants cities to potentially invest billions to construct underground tunnel networks that only a couple hundred people a day max would be able to use, let alone afford, considering the pricy ticket fees that would probably be necessary in order to generate electricity for the hyperloop’s futuristic maglev-vacuum operating system.  Bullet trains also operate on a maglev system, but the cost gets spread out to over a thousand customers per trip, instead of just 28.  Emulating Musk, fellow billionaire Jeff Bezos just unveiled his space exploration company Blue Origin’s lunar lander prototype.  The fact that NASA is, due to chronic underfunding, being outpaced by Blue Origin and Elon Musk’s SpaceX, is not only a national disgrace, but a matter of concern for the welfare of humanity as a whole.  If space travel becomes monopolized by a handful of billionaires, it could eventually lead to the scenario envisioned by sci-fi dystopias like Elysium, wherein only the rich will be allowed to escape our dying planet, while the poor masses are left behind.

In regards to public transportation (and many other fields), the US is quickly falling behind China.  The Middle Kingdom has over 19,000 mi. of high-speed rail (much of it built just this past decade); the US has just 2% of that total and much of it is contained to an old NYC-DC Acela line that is woefully obsolete. Eight new airports get built in China every year, meaning that China’s total stockpile of airports will double by 2035.  The last American international airport was built last century and many existing airports, like the infamous LaGuardia, are falling apart due to underfunding.  The nation famous for its cyclists also boasts the world’s largest elevated bike lane; by contrast, bike lanes are a very controversial issue in American cities, where its staunch-individualist detractors decry them as Communist plots.

This growing disparity is being fuelled by the two nation’s different appropriations models.  China realizes the importance of central planning in regards to major infrastructure projects.  Investing in high-speed rail might not be “profitable” if measured solely by ticket revenue, but it pays for itself in the long-term by spurring urban development, construction contracts and employment, and increased tax revenues from workers now able to access better jobs and commerce.  Not to mention that traffic accidents, often the result of crumbling and obsolete road infrastructure, is the #8 cause of fatalities worldwide, including 32,000 a year in the US.  The American mindset is more myopic, focused only on short-term viability for investors.  This was encapsulated by Trump’s infrastructure plan, which focused on subsidies for corporations and localities… the same model that has been failing America’s infrastructure for decades.

It’s clear that the Uber-ization of public transportation is an inadequate and unsustainable solution.  The corporate model is solely predicated on short-term growth and the exploitation of its workforce.  In order to keep up with fellow superpower China, the US must take a centralized approach to maintaining and upgrading its faltering subways, trains, airports, bridges, roads and waterways.  Roosevelt’s Works Progress Administration employed about 9M Americans in the construction of some of the world’s most successful infrastructure projects, such as 29,000 new bridges, at the height of the US’ greatest financial crisis. People like Bernie Sanders and Alexandria Ocasio-Cortez are looking to emulate this past success by enacting a Green New Deal, which would employ millions of Americans in constructing sustainable infrastructure.  Likewise, it would be a boon for construction firms, industrial goods suppliers like Caterpillar, shipping-oriented companies like Amazon and urban-based businesses as a whole.  America must invest itself, in its people, in its future.

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Economy

Convergence Of Competitive Markets And Indian Elections

Joseph Abraham

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If competition is a key component of a flourishing economy, it is equally true that competition in electoral politics and elections is a powerful force for the healthy growth of a vibrant democracy enhancing legitimacy of political parties and their responsiveness to the aspirations of the electorate.

Viewed from the Indian perspective, there is a striking identity between the rights of consumers in the free market economy and the rights of voters in our political democracy. Equally noteworthy is the identity of the fundamental principles governing the rule of law in the free market system, the institutional arrangements for safeguarding consumer rights and the rule of law of elections and the regulatory environment for monitoring the functioning of a free and fair electoral democracy. The free market system ensures the best available goods and services are offered to the consumer at the optimal price following the principles of free market competition without restrictive and unfair trade practices enforced through the Consumer Protection Act1986 and the Competition Act 2002. 

 In the democratic system, the voters are given the right to elect the best available persons as people’s representatives through conducting elections in a free and fair manner which forms the bedrock of democracy. This is ensured by the Election Commission through the enforcement of the Guidelines of Model Code of Conduct for political parties and candidates during elections mainly with respect to speeches, polling day, polling booths, portfolios, election manifestos, processions and general conduct. Thus, while the role of a Referee in the free market system in India is played by the Consumer Disputes Redressal Forum and Competition Commission of India, the rules of  free and fair elections in  political democracy are enforced by the Election Commission of India.    

In a market economy, competition facilitates a host of benefits: awareness and market penetration, higher quality at same prices, increase in demand and consumption through competitive pricing, product differentiation, upgradation and innovation, improvements in efficiency of production at optimal levels by minimising cost and losses and increasing customer service and satisfaction. Competition in politics and elections elevates the voter to a pivotal role in democracy as that given to the consumer in a market driven economy. Electoral candidates vie for votes by promising reforms such as better governance, greater socio-economic equity and positive measures for poverty alleviation.

Each political party through its campaigns, manifesto and other propaganda machinery strives hard to win the maximum number of voters in electoral democracy transforming it as a political free market system with fierce competition  between the players similar to the efforts of sellers in the  free market economy to attract the maximum number of customers.

A   free market system across the globe,  is characterised by the existence of not only the  most efficient firms but also several  inefficient ones who are unable to produce the best quality goods and services  at lowest prices and even  those resorting to fraudulent ,  restrictive and unfair trade practices. Similarly, in political democracy and elections around the world,  besides politicians and parties with high degree of integrity and democratic values, there are those with criminal records, adopting ideologies prejudiced by notions of  race,  caste, colour, gender and religion based politics, and those charged with allegations of vote buying etc. which continues to undermine the democratic process.

Consumer Rights in a Free Market Economy

In India,  the interests of the  consumer in the market economy from restrictive, unfair and anti-competitive trade practices by firms  is safeguarded through several strong legal provisions which inter alia includes  the enactment of the  Consumer Protection Act 1986  and the Competition Act 2002. In addition, consumers rights in the economy are further protected through The Indian Contract Act, 1872, The Sale of Goods Act, of 1930 and  The Agriculture produce Act of 1937.   This is further strengthened by the establishment of supportive quasi-judicial institutional arrangements i.e the Consumer Disputes Redressal Commission at the National, State and District level as well as the Competition Commission of India.

The main objective of the competition law of India is to promote economic efficiency using competition as one of the means of assisting the creation of market responsive to consumer preferences. The advantages of perfect competition are three-fold: allocative efficiency which ensures that costs of production are kept at a minimum and dynamic efficiency which promotes innovative practices.

To achieve its objectives, the Competition Commission of India endeavours to do the following:

  • Make the markets work for the benefit and welfare of consumers
  • Ensure fair and healthy competition in economic activities in the country for faster and inclusive growth and development of the economy.
  • Implement competition policies with an aim to effectuate the most efficient utilization of economic resources.
  • Develop and nurture effective relations and interactions with sectoral regulators to ensure smooth alignment of sectoral regulatory laws in tandem with the competition law.
  • Effectively carry out competition advocacy and spread the information on benefits of competition among all stakeholders to establish and nurture completion culture in Indian economy.

Voters Rights in a Political Democracy

As a free market economy cannot sustain consumer rights without supportive legal and institutional framework, there is little doubt that for the survival of a free and fair democracy, the rule of law should prevail and it is necessary that the best available persons should be chosen as people’s representatives for proper governance of the country (Gadakh Yashwantrao Kankararao v Balasaheb Vikhepati lAIR 1994 SC 678). India isa sovereign, socialist, secular democratic republic. Democracy is one of the inalienable basic features of the Constitution of India and forms parts of its basic structure (Kesavanand Bharati v State of Kerala and Others AIR 1973 SC 1461). The concept of democracy, as visualised by the Constitution, pre-supposes the representation of the people in Parliament and State Legislatures by the method of election (N.P.Punnuswami v Returning Officer Namakka lAIR 1952 SC 64).

 Accordingly, in India,  in the  realm of political democracy and elections, the interests of the voters and electorate  is safeguarded through the Constitution of India,  Representation  of the People’s Act 1950 and 1951,Presidential and Vice Presidential Elections Rules 1974, Registration of Electors Rules 1960 and Conduct of Elections Rules 1961.

In India, the above legal provisions of elections and voting under political democracy    are administered and further supplemented by the Election Commission’s directions and instructions on all aspects. The underlying principle of  parliamentary democracy enforced by the Election Commission of India  is to ensure free and fair elections for which there are three pre-requisites: (1) an authority to conduct these elections, which should be insulated from political and executive interference, (2) set of laws which should govern the conduct of elections and in accordance whereof the authority charged with the responsibility of conducting these elections should hold them, and (3) a mechanism whereby all doubts and disputes arising in connection with these elections should be resolved. The Constitution of Indi has paid due attention to all these imperatives and duly provided for all the three matters.

The Constitution has created an independent Election Commission of India in which vest the superintendence, direction and control of preparation of electoral rolls for, and conduct of elections to, the officers of president and Vice President of India and Parliament and State Legislatures (Article 324). A similar independent constitutional authority has been created for conduct of elections to municipalities, panchayats and other local bodies (Articles 243 K and 243 ZA) along with legal and institutional provisions for  settlement of disputes relating to elections.

Model Code of Conduct in India

Election Commission of India  has laid down a set of guidelines for conduct of political parties and candidate during elections. The main points of code of conduct are:

  1. The government may not lay any new ground for projects or public initiatives once the Model Code of Conduct comes into force.
  2. Government bodies are not to participate in any recruitment process during the electoral process.
  3. The contesting candidates and their campaigners must respect the home life of their rivals and should not disturb them by holding road shows or demonstrations in front of their houses. 
  4. The election campaign rallies and road shows must not hinder the road traffic.
  5. Candidates are asked to refrain from distributing liquor to voters.
  6. The Code hinders the government or ruling party leaders from launching new welfare programmes like construction of roads, provision of drinking water facilities etc or any ribbon-cutting ceremonies.
  7. The code instructs that public spaces like meeting grounds, helipads, government guest houses and bungalows should be equally shared among the contesting candidates. These public spaces should not be monopolized by a few candidates.
  8. On polling day, all political party candidates should cooperate with the  poll-duty officials at the voting booths for an orderly voting process. Candidates should not display their election symbols near and around the poll booths on the polling day. No one should enter the booths without a valid pass from the Election Commission.
  9. There will be poll observers to who any complaints can be reported or submitted.
  10. The ruling party should not use its seat of power for the campaign purposes.
  11. The ruling party ministers should not make any ad-hoc appointment of officials, which may influence the voters in favour of the party in power.
  12. Before using loud speakers during their poll campaigning, candidates and political parties must obtain permission or license from the local authorities. The candidates should inform the local police for conducting election rallies to enable the police authorities to make required security arrangements. 

Conclusion

In a wider sense, both free markets and democratic elections are run on the basis of a set of rules with respective regulatory bodies enforcing the rules of the game. While there is a strong element of political centralization in the decision making process of elections, free market system is tilted more towards the principle of economic decentralisation. However, the consumer and the voter whose rights are legally and institutionally safeguarded remain as the principal beneficiaries of both systems- the economic and political. Thus free markets and democracy have identical underlying objectives of maximising welfare of the people. The convergence of the political economy of free markets and elections therefore highlights the democratic principles governing the welfare of citizens.

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Forty-two countries adopt new OECD Principles on Artificial Intelligence

OECD and partner countries formally adopted the first set of intergovernmental policy guidelines on Artificial Intelligence (AI) today, agreeing to...

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