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Thursday, Sep 11, 2003

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TAMP lines loosened

MOST ECONOMY-WATCHERS WILL see the granting of autonomy to major port trusts in the matter of fixing rates a cloud with a silver lining. An element of flexibility is being introduced in the functioning of an otherwise rigid system. The Tariff Authority for Major Ports will now only fix the ceiling, allowing individual port trusts to play with rates within thatcap. Few government decisions in the recent past have received so much unreserved praise. The major port trusts, almost without exception, have welcomed the move unequivocally. Understandably so.

The old dispensation had generated a plethora of anomalies — the government-run berths charging one rate and the private operator within the same port another. For every small issue concerning rates, the chairman of a major port had to obtain the regulator's clearance. If he wished to have his way, he would exercise special powers by invoking the relevant clause of the Major Port Trust Act but often only to realise later that this was best avoided. The proposed autonomy in tariff setting will end the rigmarole. It was odd that the major port trusts, even as they faced competition from the private operators, had to contend for so long with a system marked by lack of autonomy and that too under a Government avowedly pro-business and professedly a firm believer in the free interplay of market forces. Not that the need for bold action was not widely understood. The policy-makers knew very well that the last big push towards liberal economic policies was brought about by the dire straits the economy found itself in. More than 10 years on, the Government is placed well enough to adopt the same strategy — undertaking reforms in areas it knows to be necessary in the country's long-term interests. The fact that such a state of affairs persisted for so long only suggests that there are forces within the government that often work at cross-purposes. Also, for many major ports, especially on the western coast, their minor counterparts, enjoying greater freedom under private ownership, are an ominous threat.

All these developments bring into sharp focus a pertinent point: Do we really need a tariff regulator for the port sector? Regulation is needed in a monopoly or near monopoly situation, even when the state is the sole provider of services. With each port now deciding on its own tariff structure, and the competition among them set to intensify, it appears pointless to have an organisation like the TAMP. Far more important in the interest of port users will be to ensure greater efficiency through healthy competition. The grant of autonomy is one such step. Many more will be needed.

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