The Hindu Business Line : `Supply and demand should decide prices'

Chennai, April 6 Only supply and demand should decide prices and not anybody not even the Government, for market economy and economic growth, according to Dr Michael Fuchs, Member, German Federal Parliament.

Addressing a seminar on small and medium enterprises as engines of growth for growth and employment, Dr Fuchs was drawing on Germany's experience and policy framework in setting up a thriving small and medium enterprises sector.

Govt focus

Governments should only focus on ensuring competition and preventing monopolies and enabling a inclusive growth of the private sector. State control of profits and prices should be avoided as stringently as cartels and monopolies.

Of the 3.4 billion businesses in Germany over 99 per cent were SMEs and provide more than 70 per cent of the employment and acts as a training ground for 80 per cent of the workforce.

SMEs paved the way for the resurgence of Germany's economy by creating a large middle class that led to social security and stability.

Among the factors that contributed to the success of the market economy for Germany was the independent central bank that did not bow to interference from politicians, he said.

SMEs face greater challenges from globalisation as compared to larger players. They are handicapped by inadequate information flow, market opportunities and the rules and regulations in the destination markets, Dr Fuchs said.

Bilateral trade

The bilateral trade between India and Germany had crossed $10 billion in 2006 against $5.5 billion in 2004, something the two countries had expected to happen by 2010, he said.

Mr N. Kumar, Vice-Chairman of the Sanmar Group, in his address at the seminar organised by the Madras Management Association and the Konrad Adenauer Foundation, said that small and medium enterprises should expand to the tier II towns and rural areas.

Businesses should concentrate on upgrading technology to be able to meet market expectations. They should benchmark best practices in India and abroad.The cluster movement must be expanded and a system of awards and recognition put in place, Mr Kumar said.

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