Here’s another example of the government possibly abusing its dominant power—and thus denting the cause of competition. The Economic Times reports that the finance ministry has directed the government— across levels and various wings—to park a substantial chunk of its idle funds with and route most of its business through public sector banks. This may even entail shifting such funds and current business out of private sector banks. And the size of the pie is naturally huge.
One can’t blame the state-run banks to feel glad at getting preferential treatment— as a reward for toeing the official line in politicized matters such as priority sector lending. But wouldn’t this add to their complacency? Being thus assured of business, they would have that much less incentive to compete in the market space. And who decides if this isn’t an unfair practice?