Advocating Pro-competitive Reforms in India: Achievements & Challenges CREW Project CUTS India Team Rijit Sengupta, Neha Tomar & Shreya Kaushik 14 th December 2015, Nairobi

Outline 1. Policy & practice changes in sectors [staple food (wheat) & bus transport] 2. Evidence based policy advocacy 3. Challenges in advocacy 4. Way forward 2

I. Policy & Practice Changes in Staple Food (Wheat market) 3

Key Findings: Reforms in Seed sector Greater attention to seed sector (National Seed Policy, 2002) State-level reforms flowing from national policy shift Private participation enabled through ‘Agriculture Roadmap’ 2006 (Bihar) helped users (farmers) get good quality seeds easily at low cost Number of private seed firms increased since these reforms in Bihar 4

Key Findings: Procurement (PACS, Bihar) Present at every Panchayat level (8,300 plus in nos.) Institutional weaknesses of PACS, eroded its eminence: -Delayed payments (deflects small farmers to pvt. buyers) -Poor attention to quality -Not accountable to beneficiaries (Panchayat ?) PACS network and State support makes it a strong player, but needs reforms Farmers seldom paid in Minimum Support Price (Pvt. buyers) Farmers have high expectations from PACs; ONE STOP SHOP! 5

Key Finding: Issues in Agriculture Marketing 6 (Agriculture Produce Market Committee, APMC) Continued government control Licensing rules acts as entry barrier Severe infrastructural bottlenecks in APMC markets High intermediation cost No national level integrated market (regulatory barriers) Lesser price realisation for farmers High wastage due to long supply chain

Optimising resources to achieve project outcomes – deployment of efforts/resources to Bihar as opposed to Rajasthan Identification of state-level champions (govt. officials and policymakers) - high-level official in Deptt. of Agriculture & in Deptt. of Cooperatives, Bihar Providing inputs based on demand: (i) Reforming PACS (ii) Reforming Marketing policy Focusing on PACS and Agric. Marketing reforms in Bihar Identification of local researcher to undertake study and assist in outreach with State Govt. Outreach through the media (articles based on findings) Evidence-based-Advocacy 7

Physical meetings more effective than electronic communication Some delays due to ‘elections’ (State elections in Bihar in Oct- Nov, 2015) Data availability and quality Change in state-level officials Challenges in Advocacy 8

Dialogues (State-level discussion) on: (i) PACS reform process (ii) Reforms in the agriculture marketing (iii) Impact of abolition of APMC Future project interest ‘Good practices’ among PACS Research: Involvement of women in decision-making vis-à-vis procurement through PACS (Bihar) Way forward 9

II. Policy & Practice Changes in Bus Transport 10

Key Findings Monopoly of Gujarat State Road Transport Corporation ‘Stage carriage’ monopoly to GSRTC on inter-city routes (1994) Similar tendency in state policy: Kerala, Karnataka, TN, etc. High operational cost of GSRTC (about US$47mn in ), burden on the state exchequer Shrinking GSRTC fleet & high passenger demand led to entry of private operators (in ‘stage carriage’) – regulatory failure Led to rent-seeking behaviour Private operators deemed illegal (stage carriage) and penalised Service of public & private operators comparable, consumers indifferent 11

Engagement & Sensitisation of Deptt. of Transport, Gujarat (finding a champion) Uptake of the evidence: Adverse effect s of GSRTC monopoly Approach paper: ‘Inter-city transport regulatory framework’ (knowledge partnership) Application of competition principles in Transport sector (competitive services on routes, competition in procurement) Political economy analysis to assess – Winners Vs Losers Voice of the unheard: Incorporating views of private sector and facilitating their engagement with the Govt. (Deptt of Transport) Close engagement of Competition Commission of India (opportune: Guidelines for Review of State Legislations 2015) Evidence-based-Advocacy 12

Key Findings Abolishment of Madhya Pradesh State Road Transport Corporation (Greater Openness) Liberalised sector after MPSRTC’s abolishment in 2005 DoT’s function more as administrative body than performing regulatory functions (limited to licensing and fare setting) Development of the ‘rules of the game’ (allocation of powers to public authorities to regulate private operators) – not done Fare determination through an opaque process, not inclusive Low accountability of private bus operators: non-availability on non-profitable routes, off peak hours 13

Interest at the highest administrative level (champion) In addition to reforming transport infra as per the draft MPITA – CUTS suggestion for reform to include services and PPP projects (knowledge partnership) Timing was right: evidence used as input for refining structure of MP Intercity Transport Authority (initiated by State Govt since Feb, 2015) State-level process initiated for MPITA operationalisation (pushing for a stakeholder process) Evidence-based-Advocacy 14

Advocacy at National level - PROCUREMENT Goal: Infusing competition principles in public procurement of bus services in states (Gujarat and MP as cases) Ahmedabad (Gujarat) and Bhopal (MP) have one operator each in the BRTS segment ⁻ Chartered Speed Carrier (Ahmedabad) and Capital Roadways (Bhopal) ‘Eligibility criteria’ for bidding like in the case of BRTS, limits the number of worthy operators hence limiting competition (lack of an institutional guideline on competitive procurement process) 15

CUTS Inputs Liasoning with CCI to facilitate discussions between CCI and relevant State Govt Departments/officials: (i) Possible ‘institutional guideline’ on competitive procurement’ of bus services (ii) Guide the DoTs for facilitating competition among operators on selected routes (iii) Capacity building of the DoTs vis-à-vis competition principles (Competition Act, 2002) 16 Advocacy at National level - PROCUREMENT

Challenges in Advocacy Attention of senior civil servants difficult Limited Time of senior policymakers – need for continuous engagement and follow-up Internal capacity to own and implement reforms Political economy factors/constraints Activities go beyond pre-determined scope (needed to maintain credibility and create buy-in) 17

Continuous engagement necessary (maintaining the ‘knowledge partnership’) Advocacy and policy influence to achieve planned reforms Initiating a stakeholder engagement process (planned reforms) Challenges in sustaining momentum (limited time and resources) Way forward 18

Movement towards institutional reforms of PACS in Bihar Contributing towards farmer oriented market reforms in Bihar State-level Transport Regulatory Framework in Gujarat and/or in Madhya Pradesh Capacity building by Competition Commission of India (CCI) of State Govts. Anticipated Outcomes 19

Thank You and 20