Has Liberalization & Deregulation been for the Better or Worse?

"Liberalize the Economy"

"Free the economy"

The above statements have always been the cry of the Market Fundamentalists.

Our current puppet PM Dr. Manmohan Singh is credited with freeing the economy from all its conrols and resulted in a better future for us citizens. But has it been or the better??

Its seems the time has come around and there are increasing calls for more and more regulation in many areas.

Lets have a look at what has happened since liberalization:

a. Insurance Sector: LIC was the sole entity in Life Insurance sector and had an absolute monopoly. Liberalization resulted in emergence of Private Insurance players such as HDFC, KOtak, ICICI, Aegon Religare with the variety of Insurance products particularly ULIPS. The kind of misselling happened in this sector is well known. Almost all the readers reading this article would have been approached by the Misselling Agents of the Insurance companies and many would have also been a victim of them. Aegon Religare came out with its Premium Gain plan such that if the investor before the end of policy term, he looses his first years premium. Well such plan might well have been labelled Premium Loss. The misselling became so rampant that regulator IRDA had to step in repeatedly and form new and tighter guidelines and regulations to curb the malpractices inclusing the recent ones. Each time fresh guidelines were issued, it resulted in huge hue and cry from the Insurance Companies as if sky was falling down , completely brushing aside the fact that the key factor for interference was the failure of the companies to discipline their errant sales force. They did not have any conscience and totally ignored the fact that they were ruining the lives of people in the name of securing it.The question should also be raised how IRDA have allowed such useless products to be launched by these companies, but we will leave it aside for another day.

For many of us who have lost money in ULIPS, these regulations could not have come in sooner.

b. Real Estate Sector: Pain borne by the customers due to the lack of regulations in the real estate sector is well known. Be it not disclosing the carpet area to customers, hidden charges, increasing the super area at the time of possession( BPTP Park Elite Floors Faridabad), failure to deliver the projects on time, selling of projects to customers without even getting the adequate approvals, issues faced by the customers on refund of their money, non allotments of property..the list is endless. Each one of us hopes that regulations come in sooner rather than later.

c. Education: Ever since liberalization, the emergence of private colleges promising the moon for its students is known to everyone. The colleges having little or no infrastructure, shortage of faculty, non recgnised courses, huges hike in fees etc do not need to be mention here. Each one of us has faced these problems. Whats worse is that land is sold to these entities at throwaway rates for providing the quality education to poor people, but these money minded institutions failed to discharge their part of duty. Supreme court has had to step in repatedly to control such issues.

Again for this sector, there is a demand for a tighter and more efficient regulation in the the education sector.

d. Telecom Sector: Many of us have faced the issues of wrong billing, automatic activations of services without our approval, hard selling of products etc. Each time TRAI has had to step in and put out a new set of guidelines to curb the malpractices by the telecom provider. The 2G scam is also well known wherein the govt minister are hand in glove with the private companies.Once can only imagine how many skeletons will be unearthed before the judgement is passed in this scam.

So far we have considered only a few of the sectors which were earlier liberalized and regulations were reduced. Each time it resulted in opening up a can of worms and regulator had to step in to control the situation. In each case, the demand for tighter regulations were raised by none other than the common citizens of the country who are supposed to be the beneficiaries of the liberalized regime. Earlier it was an autocratic society in our country, rule by a few( Govt and Ministers) where the few rich and wealthy people of the country bend the rules for their own benefit. Now, it has turned into a plutocracy ( rule by the rich), wherein the rich are able to make the rules to benefit themselves. Thus, what was ilegal earlier, can now be done by these companies with a legal sanction.In such a scenario, the importance of having an independent and unbiased egulator cannot be overemphasised.