Asserting that the country and its citizens have a ‘sovereign right’ over data, it disallows sensitive data collected and processed locally but stored abroad from being shared with foreign governments and businesses outside India or any such third party even with the consent of the customer.
Commending the Insolvency and Bankruptcy Code (IBC) for instilling enough fear among promoters who tended to default on loan repayment, chief economic adviser Krishnamurthy Subramanian on Friday said competition regulation also has to foster pro-market behaviour through deterrence.
Effective competition in product markets and factor markets is good for jobs and entrepreneurship as well as for fostering innovation in the Indian economy, Subramanian said speaking at the National Conference on Economics of Competition Law.
“When you have a fear of losing control over your businesses, you become careful,” he said, adding that the behaviour change following the IBC was a good example.
The IBC has catalysed the recovery of around `3 lakh crore from various default cases, directly or indirectly, since its inception in 2016. Also, around 3,500 cases involving defaults of `1.2 lakh crore were withdrawn from the National Company Law Tribunals (NCLTs) before applications were admitted by the adjudicating authority, suggesting that creditors might have recovered money from debtors by just issuing threats of the IBC. Non-performing assests (NPAs) worth another `45,000-50,000 crore were converted to standard accounts after the borrowers had paid back, ostensibly due to fears of the IBC being invoked by the lenders.
There were little difference in enforcement of IBC between small and large firms. “Similarly, enforcement of competition regulation must create deterrence without any distinction between large and small firms,” Subramanian said. He said the deterrence effects of anti-competition enforcement depends upon expected probability of detection, expected probability of conviction upon detection and magnitude of penalty upon conviction.
Speaking on digital markets, former Nasscom president R Chandrashekhar said many companies see valuations led by ‘eye-balls’ as the data in their possession could be monetised at some point of time later. Controlling and leveraging data for competitive advantage by companies have become a global issue with various countries adopting measures to protect privacy, he said.
In India, a new draft e-commerce policy was released by the Centre last week that seeks to regulate cross-border data flows, setting up storage facilities locally and establishing a ‘data authority’ to devise a framework for sharing community data. Asserting that the country and its citizens have a ‘sovereign right’ over data, it disallows sensitive data collected and processed locally but stored abroad from being shared with foreign governments and businesses outside India or any such third party even with the consent of the customer.