Five big industrial houses of the country need to be reined in

New Delhi: Due to the so-called monopoly of large industrial groups operating in India, the development of small business houses is not only being stifled, but the government is also in a way covering up these giant corporate groups, ex-Governor of the Reserve Bank of India Viral Acharya has exclaims in an article in an international news. The organization said.

India's big business houses who have extensive pricing power in retail, resources and telecommunication sectors, which has resulted in the country being unable to reduce inflation in the country, the power of these groups play a major role in keeping inflation high, so the early empire of these industry groups to reduce inflation. He gave an indirect indication that it was necessary to disperse.

The five big (Big Five) conglomerates namely Reliance Group, Tata Group, Aditya Birla Group, Adani Group and Bharti Telecom have grown at the expense of small local business houses, said Viral Acharya. He was the Deputy Governor of RBI from 2017 to 2019.

Sky-high government tariffs protect these groups from competition from foreign companies. National champions, which some say are the result of India's new industrial policy, appear to be providing the fuel to keep price levels high in the country, Acharya said in the article.

Viral Acharya is currently Professor of Economics at the New York University Stern School. He suggested breaking up such groups to increase competition and break price monopolies.

Failing this, such conglomerates should be made economically unattractive so that they cannot remain giants, unless the productivity gains are in fact large, he wrote in a paper presented at the Broking Institute Panel on Emerging Markets.

The problem in India is that rival companies are too small to withstand the productivity gains of larger companies.

It has also been argued by Acharya that since these five big companies control the production of metals, coke, refined petro products and retail trade and telecommunications, in case of reduction in the prices of raw materials, the consumers of India cannot get the full benefit.

Last year, although commodity prices fell globally, they remained high in India. India needs to establish greater economic balance. Viral Acharya had in the past voted against Reserve Bank Governor Shaktikanta Das' repo rate decision. "I don't have answers to all the questions, but an open discussion on the facts, opportunities and threats can help make India a big beneficiary of the current resentment against China," he also noted in the article.