RBI AND DEVELOPMENT FINANCE-Time to Return to Old Role

threat from major international players. The latter is a crucial consideration because transnational firms with deep pockets have the wherewithal to offer attractive rupee prices to acquire additional stock, including the 20 per cent they need to buy for embarking on a take-over. Not surprisingly, there is enough evidence already of increase in take-overs with the aim of market entry or market consolidation by leading corporate players. The Bhagwati Committee's recommendations thus have two contradictory tendencies. By favouring incumbent managements, they bias the take-over procedure in the direction of sustaining managerial status quo. At the same time, by legitimising negotiated or hostile acquisition of shares by large domestic and international companies with substantial financial strength, they accentuate tendencies towards product and capital concentration. Both these tendencies, it should be obvious, are likely to hinder rather than advance competition, which the dilution of MRTP and of foreign investment regulation under the economic reform regime is supposed to achieve.