CUTS-CREW Diagnostic Country Report

1. CUTS-CREW Diagnostic Country Report Presentation by Indicus Analytics 24th July 2013

2. Structure of analysis • Identification of components of competition reform • Institutional responsibility in reform implementation and actual performance review • Failed reform initiatives unlikely to have any (positive) impact, but will have lessons to learn on reasons for failure • Successful reforms, in addition to welfare impact, will also have lessons on the administrative structure working behind the success of the reform initiative as well as how the policy was implemented • Impact of competition reforms on market structure • Market structure based on Porter’s “Five Forces” • Analysis based on DFID Competition Assessment framework • Impact of competition reform on consumer and producer welfare • Assessment of consumer and producer concerns • Further suggested reform initiatives and likely benefits

3. Methodology STEP 1: DESK BASED RESEARCH STEP 2: FIELD WORK STEP 3: ANALYSIS STEP 4: REPORT WRITING

4. Methodology STEP 1: DESK BASED RESEARCH • Thorough literature review, discussion with expert of competition policy, reform initiatives, previous studies • Collection and analysis of secondary data • Stakeholder identification • Selection of impact/welfare issues to be covered , hypothesis formation • Selection of variables on which data to be collected, identification of data sources • Development of questionnaires for perception survey, • Development of guidelines for in-depth interview • Finalisation of sampling framework

5. Methodology STEP 2: FIELD WORK • Data collection on price, alternates, etc. • Perception survey • In-depth interview STEP 3: ANALYSIS • Quantitative PLUS Qualitative • Impact of reform • Changes over time • Comparison across state/ city/ routes STEP 4: REPORT WRITING

6. 1(iv) Competition Reform and WelfareStaple food – Producer welfare • BENEFITS TO PRODUCERS FROM POLICY REFORMS • Minimum Support Price reforms, • Reform in procurement policy, • Reform in the Public Distribution System, • Reform in buffer stock maintenance policy, • Reform in fertilizer subsidy, pricing, distribution policy, etc. • ACCESS TO INPUTS (FERTILIZER, WATER, FINANCE, ETC.) • Ease and extent of access to inputs across all types of producers • CONTRACT FARMING POLICY • acceptability among the farmer community, • nature and extent of demand, • production, • general terms and condition, dispute resolution framework, etc. • PROCUREMENT • Scope and role of private players in procurement of agricultural produces in general and wheat/rice in particular • Extent of private participation, etc. • WAREHOUSING • Extent of private participation • Regulatory aspects – consistency, level playing field, etc. • Access to infrastructure like availability of power, transport, etc. • MARKETING OF AGRICULTURE PRODUCE • Role and activities of APMCs and extent of control of the APMCs in marketing channel, • Extent of private participation, nature of participation, ease of entry, etc.

7. 1(iv) Competition Reform and WelfareStaple food – Consumer welfare • SUPPLY SIDE • Availability of adequate supply of staple food • in both open market as well as through PDS • across different times of the year • at different locations, especially the interior villages • PRICE OF STAPLE FOOD • in open market and in PDS • determinants of price dynamics • stability in prices over time • QUALITY – PRICE INTERACTION • Availability of decent quality staple food at right price for ordinary consumers • WELFARE ISSUES ACROSS DIFFERENT TYPES OF CONSUMERS • Household consumers • Business consumers (hotel, food processing, etc.)

8. 1(iv) Competition Reform and WelfareBus transport – Producer welfare • EASE OF ENTRY FOR PRIVATE OPERATORS • At policy level as well as industry structure level (e.g. issues like cartelization, transport syndicates, etc. formed at the private level which hampers free entry) • FREEDOM AND TRANSPARENCY IN OPERATIONAL DECISION • Process of fare determination • Process of route identification • Decision on number of buses to ply on each route, across different time points, etc. • Price adjustment in response to input cost (fuel price, financing cost, etc.) changes • COMPETITIVE NEUTRALITY • Whether level playing field exists for all players • PREDICTABILITY OF REGULATORY ACTIONS, GOVERNMENT POLICY FORMULATION AND INTERVENTION, ETC. • EASE OF DOING BUSINESS • Whether the business is subject to significant regulatory, procedural, etc. burden hampering the productivity • ACCESS TO ESSENTIAL SERVICES • E.g. road infrastructure, finance, bus, etc.

9. 1(iv) Competition Reform and WelfareBus transport – Consumer welfare • AVAILABILITY OF BUS TRANSPORT • Coverage by bus transport as a share of total passenger movement • Overall as well as frequency across different hours of the day/week • Certainty of availability • Demand-supply gap • PRICE SETTING MECHANISM • Evaluation of the price setting mechanism in terms of its fairness towards the end consumers vis-à-vis the transport operators’ interest • PRICE DYNAMICS • The bus fare dynamics in actual/historical experience and its welfare impact • PRICE-QUALITY INTERACTION • Choice to consumers in terms of alternate bus transport modes available • Comparative evaluation of pricing structure of alternate modes • SERVICES AVAILABLE TO CERTAIN SECTIONS OF THE SOCIETY • E.g. small traders, women, students, etc. • ENVIRONMENTAL STANDARDS FORMULATION AND IMPLEMENTATION • PASSENGER SAFETY STANDARDS

10. 1(viii) Sampling frameworkCoverage Staple food • Only wheat • Two states to be covered • Uttar Pradesh • Punjab • Both are major producers of wheat • 540 samples from each state • Perception survey: 400 • In depth interview: 140 Bus transport • In case of inter city transport, two routes each from two states to be covered • Gujarat • Karnataka • In case of intra city transport, two cities to be covered • Ahmedabad • Bangalore • 345 samples from each state • Perception survey: 300 • In depth interview: 45

11. 1(viii) Sampling frameworkPerception survey Staple food • Producers – 200 sample per state • Distributed equally into top 4 wheat producing districts • Producer selection in each of these 4 districts through stratified random sampling • Sample will represent large/medium/small wheat producers • Consumers – 200 sample per state • Distributed equally into top most, middle 2 and bottom district in terms of annual consumption expenditure per capita • Stratified random sampling to be used for sample selection • Different types of consumers to be included – across different expenditure classes Bus transport • Inter city passenger – 100 sample per state • Two routes per state to be covered • 50 passengers to be surveyed per route • Sample selection will be stratified random • Passengers across alternate modes of services (AC vs Non-AC, Volvo vs Non-Volvo, etc.) to be covered • Intra city passenger – 200 sample per state • 3 to 4 major bus depots to be identified • 1 to 2 busy routes operating from these hubs to be identified – max 5 routes • 40 regular passengers from each of the 5 routes to be surveyed • Sample selection will be random

12. 1(viii) Sampling frameworkIn depth interviews

13. Field workData collection - Primary • Methods to be followed • Field survey • Information on price, quantity, quality, etc., especially in the bus transport sector where secondary data sources are likely to be limited • Perception survey • Focus on close ended questions • In depth interview • Guideline based open ended discussion • No Focus Group Discussions • Logistical difficulty • Possible unwillingness to share information in public • No separate case studies • Information collected in the course of interview with select stakeholders which may help in highlighting specific issues that will be included in the report

14. Analysis • Quantitative • Comparison across time: impact on select variables pre and post reform • Comparison across state, city, route: impact of a particular/similar reforms across state/city/route • Impact comparison across different reform initiatives Note: Period of coverage in case of the above three points is proposed to be limited to the post formation of Competition Commission of India in 2002. • Analysis of questionnaire based perception survey of wheat producers & consumers as well as passengers on competition reform and impact • No “quantitative” cost-benefit analysis • Difficult to capture all impacts • Scope of inclusion of costs and benefits subject to debate • Increases data collection requirement – problematic in the current time and budget constraints • Monetary value imputation of impacts highly subjective • Qualitative • In depth interview • View of stakeholders and also of producers/consumers of wheat and bus passengers

15. Thank you. Comments please.