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May 2016 Economy and Policy

Published on: 2016-05-19 13:57:25     1288 times read    0  Comments


--By Dwaipayan Regmi

You don't have a choice, either buy it, or stay out of it. You won't get any other option except this! This is called a Monopoly Market. When you have just a single vegetable shop in your locality, the seller is free to shape the price of vegetables on the basis of the area’s demand and supply. The vendor should not fear if the customers boycott the shop because the people will certainly require vegetables for their meals. Once another vegetable seller emerges in the locality, only then will the price lower due to competition between the two.

Nepal Telecom’s monopoly terminated when private telecommunication entered the market. The big ticket of NTC dropped in such a manner that any citizen could make use of it. Ultimately, nearly every individual in the country has a mobile. The competition among the companies benefitted users. The ongoing competition is likely to benefit the consumers in the days to come as well.

Today, one can choose whether to use NTC or opt for another, or use both. Also, a student has a choice, whether to study at Tribhuvan University or at another university.

The challenge that private firms can give to government owned monopoly can be witnessed in the case of media as well. Private banks have been providing better services as well. Today, the government owned airlines company is the last choice for flyers. No matter if it is for domestic or international flights, they prefer other planes instead of Nepal Airlines. Having relished a monopoly in the past, once this ended, government owned firms have been the most affected. 

Nepal’s government is still blessed with a monopoly in the case of petroleum products. Ever since its establishment in 1970, Nepal Oil Corporation (NOC) has been acting like a monopolist. Without a competitor for almost half a century, as an upshot they have the freedom to decide the price. Petroleum products are a necessity for any individual, and a must for transportation or the kitchen. NOC is not scared if anyone shuns it. It is understandable that NOC has been hooked up with Indian Oil Corporation. However, intramural factors may have been the cause, since it is a monopoly market; customers have no choice at all. No matter if the petroleum products are of low quality, highly priced, difficulty to access, there is no option! There could be alternative sources of energy like bio gas, or electric vehicles. However, they are not easily accessible either. Hence, living under their monopoly is the only choice.

Not permitting Birat Petroleum to operate on its own indicated the crystal clear vision of the government towards private firms. The charge they leveled was that it would be too expensive, but wasn’t that what the government feared? I would rather pay Rs 20 extra and get fuel without wasting an hour in queues. Rather than accepting the challenge, the government disgracefully shut them down.

Again, the Nepal government has also been enjoying a monopoly in electricity supply. Established in 1942, there have been no other private firms supplying electricity. As a result, Nepal Electricity Authority (NEA) is the only firm that has been providing electricity in the country. Electricity is vital for any individual today. As a result, NEA fears no boycott. Solar energy could be substituted for electricity, however to adopt this would require another revolution. It is also expensive. Hence, there is no option other than getting stuck with NEA, and facing the load shedding woes.

Drinking water is the next star of monopoly. The government took up the responsibility in 1973. There was no problem back then, because of the low population. However, with the growing population, and decreasing source of pure drinking water, Nepal Water Supply Corporation (NWSC) could not move ahead. Since water is a basic need, there is no other option other than waiting for NWSC’s schedule to collect water.

We don’t get good quality petroleum products, and there is always a scarcity of it. Load shedding has been a major issue in Nepal today. People have to leave their offices or colleges just to collect water, the supply of which has never been punctual in the capital. We now see how the government led monopolies have been giving trouble to the entire country. Let us not forget the time when the then monopolist Nepal Telecom (NTC) used to charge high prices. After private firms appeared, things dramatically changed. However, things are still the same in other cases. Consumers want better service, and government led services are almost a failure in large cases. From education to media, private organisations are usually regarded as the better choice.

Although NOC already granted license to private firms five years back, implementation has not been noticeable. There has to be private firms for electricity and water supply as well. We live in a democratic age. A belief in market competition would show our faith in democracy.

After Jet and Sahara broke the government owned Indian Airlines and Air India's monopoly, rapid progress was felt in the Indian airlines industry as well. After these two private airlines entered the market, they seized a larger market share than the government owned airlines within a small phase of time. Similar progress can be noted when state owned Bangladesh Telegraph and Telephone Board (BTTB) broke down the monopoly and allowed private telecommunications to enter the market.

India has already taken initiatives to suppress monopolies after its Industrial Policy 1991. Those industries which were said to be under the control of the Indian government have drastically reduced to only a handful now. The market is getting better because people get to enjoy the freedom of choice in India. Back in November 2014, the Chinese government also dissolved its salt monopoly ending state control in place since the 7th century. Bhutan's Royal Bhutan Airlines later stopped its monopoly allowing Tashi Air to fly.

The state no longer owns the power in the global world, because it is the big private companies that are gaining more power than the state. It has been noticed that private companies own more political and economic power than the government or the state. Half of the hundred biggest economies are said to be private firms rather than government owned ventures. 

The government does not own the entire market in Nepal either. Manufacturing firms, businesses and other different sectors are run by private institutions. However, there seems an extreme necessity to end government monopoly at least to manage the demand-supply ratio. An individual does not want to spend 30 hours of his time every month to get petrol. We talk about a 'Free Market', we discuss 'Economic Freedom', however, with these restricted barriers, we are lagging behind. It should not be NOC who decides who is to get fuel and when, that would be feudalism in one way or another. 

The recent blockade should be regarded as a lesson, where the houses are still deprived of cooking gas. Had lessons been learnt from the blockade of 1989, had India's Industry Policy of 1991 been taken as a lesson, things would have been different. Better late than never!

Regmi is an MBA student at JNTU (A), Andhra Pradesh, India. He has been working as a freelance writer and is a blogger.

 


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