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Public pressure needed for privatisation

The failure of the National Democratic Alliance government at the Centre to make good its promise to privatise the nation's bleeding public sector enterprises seems to have taken leader writers in the media across the country by surprise.

On June 23, against widespread expectations of 'big ticket' privatisation of PSEs in the crude oil refining and telecom sectors as also of other public sector majors such as SAIL, ITDC,ONGC Maruti Udyog, the Cabinet Committee on Divestment announced an 'in-principle' decision for divestment of 11 middle and small PSEs like marginalised trading companies like MMTC (Minerals & Metal Trading Corporation), STC (State Trading Corporation), Shipping Corporation of India and small ITDC owned hotels.

With similar in-principle approval having been given for hiving off PSEs such as Air-India and Indian Airlines, the total number of companies in which the Union government is ready to off-load majority shareholding adds up to 28.

It is significant in this context to note that the aggregate number of PSEs owned by the Central government is almost 200. Despite being monopolies of market-dominant companies and enterprises most of them chalk up huge

Annual losses and the aggregate return on investment in PSEs are barely 3 per cent, most of the profit being contributed by monopoly oil sector companies.

Moreover across the country state governments again own as many PSEs and they are in even worse shape financially than Central government owned PSEs.

It is against this backdrop that one must assess the desultory, half-hearted privatisation initiative of the NDA government.

It is pertinent also to note that the CCD has given a mere 'in-principle' clearance to the privatisation of these 28 second-rung PSEs. This means that detailed proposals for the divestment of the majority shareholding of these companies have to be presented to the CCD which may yet alter, amend and abridge - or even reject - them. Quite obviously there are powerful forces within the NDA government in New Delhi which despite overwhelming evidence to the contrary are still not convinced of the merits of big-bang privatisation of PSEs and the exit of government from business, industry and commerce.

I have always maintained that the opposition to privatisation of the public sector has little to do with ideology. This assertion has been vindicated by the fact that the most strident 'conscientious objectors' to the latest privatisation initiative are Petroleum Minister Ram Naik of the Bharatiya Janata Party and Heavy Industry Manohar Joshi of the Shiv Sena. On paper at least the BJP and the Shiv Sena are the most extreme right wing parties of India's political spectrum. Therefore, according to classical political theory, they should be very much in favour of privatisation and denationalisation.

Thus, to understand the widespread opposition to privatisation of PSEs within the political class, the bureaucracy and the organised sector working class, one must understand the spoils culture of the public sector.

Long ago someone presciently remarked that the public sector is the politician's private sector. There is considerable verity in this sarcastic observation. The plain truth is that politicians in power have too much to lose by way of creating jobs, earning clandestine commissions on PSE purchases (and most PSEs are capital-intensive) and by way of using public sector companies or departments' airplanes', cars, guest-houses and staff for personal purposes.

Over the past five decades during which PSEs have been expanded to meet the demand of a growing population for goods and services as also to ensure that they dominate the commanding heights of the Indian economy, the culture of loot and abuse of PSEs by politicians, bureaucrats and employees has struck deep root. Hence, the widespread resistance to privatisation of even chronically loss-making PSEs which are heavily dependent upon budgetary support for churning out sub-standard goods and services.

The powerful employees' unions of the PSEs support the reluctance of politicians and bureaucrats to give up the power and perquisites which suzerainty over the PSEs provide. Long used to the slack PSE work culture which tolerates moonlighting and racketeering (the natural consequence of monopoly), public sector employees are even more stridently opposed to privatisation which they (rightly) fear will lead to downsizing of the invariably heavily over-staffed PSEs and accountability in the workplace.

This fear of fair day's work being demanded for a fair day's wages is the explanation behind the rash of strikes in the PSEs particularly in the heavily mismanaged nationalised banks, insurance companies and utility companies.

It is against this backdrop of powerful and entrenched vested interests cutting across ideologies and party lines being dead opposed to privatisation that the public which has financed the growth of PSEs in good faith and which is now suffering the consequences of the misgovernance of these enterprises, must weigh its options. Quite clearly privatisation of the PSEs is a social necessity because budgetary support to the PSEs is a major contributory cause of the nation's massive fiscal deficit which stokes inflation and starves the social sector - education and health - of investible resources.

It is pertinent to bear in mind that of the 200 million people employed within the Indian economy only about five million are employed within the PSEs. Therefore, to allow this small, failed minority to continue to dictate the national development agenda is perverse and unacceptable.

In the final analysis politicians in New Delhi and the state capitals will have to legislate the privatisation of the nation's misgoverned public sector enterprises. And politicians react only to public pressure and opinion. Therefore the onus is upon citizens not to be misled by the self-serving arguments of politicians and PSE employees and to exert the degree of pressure required to force the privatisation of PSEs which is a prerequisite of the double digit economic growth required to pull the nation out of its self-created economic mess.

Dilip Thakore was the founder-editor of Business India and Business World and is currently editor of Education World.

Dilip Thakore

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