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'Everything in India has become dysfunctional'

When he was an editor, Arun Shourie made waves with his investigative brand of journalism that shook the very foundation politicians stood on.

Vitriolic as his writing was, it was backed by meticulous research and studied analyses. It got him the Magsaysay Award, among many other awards.

Today, as Union Minister of State for Divestment, he burrows a lone furrow working long hours on one of the toughest assignments in his career. For, educating politicians on divestment is not easy. And targets may have to be recast.

In a candid interview with Ramesh Menon, he talks of how public discourse discusses trivia and not how the country is being bled by lopsided priorities and narrow political interests.

Is there anyone in this country who wants your job?

I presume there must be many persons. Some even think there is money to be made in this job. (Laughs)

It is really an unenviable job?

Well, for me it has been an interesting one. I am now dealing with issues that have not been dealt with for some decades now. It is good to read up and formulate plans to do them.

What makes your job so tough?

Everything in India -- the legislature, administration and the system as a whole -- has become dysfunctional. So, it takes 30 times the effort and time that is necessary.

China is swiftly implementing decisions. But even the Chinese example does not seem to stir anybody. The Chinese are almost done with their initial public offerings. But, we are still debating.

We are going through committees. It is this committee, that committee, reference to this or that ministry, secretaries, managements, six or seven unions and so on. And then, there is noise made in Parliament.

A country should see that reforms cannot go on at this pace. We will be bankrupt before we take the steps to save ourselves from it.

After one of these meetings, a senior government official suggested we must redraft and reformulate our divestment policy. It should be just one line, he said: 'Divestment is beyond us'.

Is there some truth there?

It is like running on a treadmill and not getting anywhere. It is a matter which is before the prime minister and other senior ministers.

We have to rethink the general reforms question, the way of doing things on administrative reforms. We have to do something which is drastically different and not just setting up a reform committee or setting up a single window clearance and so on.

What are the problems ailing divestment, as you see them?

The first problem is a fractured legislature. All legislatures in India are more or less fractured. Therefore, governments are made of such heterogeneous elements, that on any matter, it is difficult to move swiftly.

Indian democracy instead of meaning that everyone has a vote has come to mean that everyone has a veto. Everybody can stop anything anytime.

The second difficulty I feel is the perverse and uninformed public discourse on subjects like divestment; even among us journalists.

A journalist goes to one fellow and asks for his view. Then he goes to the other person and says this is the view I got from this person so what do you have to say on it. That is journalism today.

You wrote a piece in the Asian Age a few years ago called 'Someone said so' dealing with the same thought.

Someone says that the value of Air-India is Rs 90 billion. What do you say, they ask me. But is this person a valuer or a run-of-the-mill politician who has dreamt of this figure. They said that the value of Balco was Rs 50 billion. What has happened to that shouting now?

But as someone has put an astronomical figure, it becomes the benchmark. No basis is revealed.

I bet my life, you ask these fellows -- even the staff and unions as to what is Air-India's debt today. If you are doing any valuation, this is the first thing you will see. They will not know.

The public perception is that Air-India is a zero-debt company. It's debt today is more than Rs 32.50 billion and for the last five years it has not been borrowing for capital expansion like fleet expansion, but for its working capital.

Today, Air-India's interest on working capital is more than Rs 1 billion a year. But the public does not know this.

Why are journalists not going into details and why are they not familiarising readers with such truths?

Journalists and lay readers and persons in public life are uninformed. So they gravitate to negative statements. Wild statements are made without research.

Journalists say that the Air-India divestment has been grounded. But when we take decisions, they ask me why I am in such a hurry. Then they say that Air-India is overstaffed.

A day later they say 'What is this, you just want to sack people'. What I am trying to say is that we are not making up our minds. We are just gravitating to the negative.

Energy is dealt with by five ministries. Transport is in four ministries. Divestment requires consultation on every single step with ten different departments at five or six levels.

This has become the nature of the Government in India. Not just of the Government of India, but also of the states.

There are some advantages. The prime minister, the finance minister, the external affairs minister, the home minister and other key ministers are committed to reform. They see that there is no other way but this. They feel duty-bound to carry through these measures even though there will be public misrepresentation and alienation of the public.

The other advantage is that central and state finances are in a stage of criticality and, therefore, the options are fewer and fewer.

The narrowing of options and the eminence of the fiscal crisis in domestic finances will eventually speed up the process.

That is a silver lining.

The states are in an even worse position and are now taking steps on reform. Like Rajasthan is doing in electricity. S M Krishna in Karnataka, Digvijay Singh in Madhya Pradesh and Chandrababu Naidu in Andhra Pradesh are strong votaries of reform.

Any state which does something right facilitates other states in doing it right.

Will others follow?

It just becomes easier to do so. We can think of many such good things. Another silver lining is that the power of traders in unions to block things is much less than it was twenty years ago.

Today, their power is confined to public sector units. Eventually, workers will see, as the workers in Balco saw, that politicians and labour leaders were using them.

Why has the number of bidders for both Air-India and Indian Airlines dropped?

After they looked at the condition of Air-India, their interest waned. In one case, a very prominent person in aviation -- who was a big bidder -- told me that as he had got to know the airline better, he did not understand why he should pay us for our headaches.

Swissair was one of the bidders. At that time, its CEO felt that one of the ways to expand was to buy a bankrupt or near-bankrupt airline.

But in the last financial year, Swissair lost $1.8 billion. That CEO was removed. The new CEO does not believe that is the way to go. He is now trying to stop the hemorrhaging of Swissair. That is what happens when you keep waiting.

One of the papers today said that you presented a 57-page note to the Cabinet Committee on Security on why the Hindujas should be considered for handing over of Air-India. Can such things be always done before divesting?

Firstly there is no 57-page note. It is all bunk. All names of the seven bidders were sent to the Cabinet Committee on Security. Rightly or wrongly aviation companies are perceived by the Indian public and Indian Parliament as having security implications.

In the age of satellites, we think we have secured our airports by putting a board there saying 'No Photography Allowed'. We have to live with that public perception.

I had sent all names of all bidders and material available on them to the Cabinet Committee on Security.

They had given us general guidelines to pursue. They said when we were close to the final, technical and financial bids, that we should file the names of bidders and the information from intelligence agencies on them. That is what we did.

The law ministry's view which is also our view is that we should formulate a set of guidelines. The same question has arisen with regard to one advisor - CSFB -- in relation to VSNL and three firms Sterlite, BPL and Videocon. They were indicted by Sebi. CSFB has been linked to Ketan Parekh, and the other three to Harshad Mehta.

The question was should the advisor continue as the advisor for VSNL when it has been indicted by the regulatory authority?

Similarly for the other three companies. The correct view was taken that we should not proceed from item to item and assess individual cases according to guidelines. And guidelines will get refined with time.

The budget said that 27 public sector units are up for divestments. Not one has happened till now and a quarter of the year has gone past.

That is right. More should have happened. The finance minister is very eager. But I am afraid that the current procedures are such that unless they are drastically altered, the pace is going to be such.

In September, October and November, we will see a number of the current exercises reaching fruition. Like CMC that has eleven bidders. Nine or ten hotels of ITDC are all ripe now.

What kind of money do you plan to get out of divestment by the end of the year?

I no more work to targets like that. If you work like that then people accuse you of settling for distress sales to meet the target. So it is best to work hard.

The budget figure was 120 billion...

It was an indicative figure.

What about the political acceptability to the idea of divestment. Politicians are somehow not seeing it as a progressive and pragmatic measure.

Unfortunately, that is the case. Politicians are not taking the long-term view. When you attempt a change, people will not agree. What governments have to do is to push through that change resolutely and defiantly.

Ten years later, a new consensus emerges around that new arrangement. Unfortunately, in India, politicians do not have that long a horizon.

There is tremendous fear of retrenchment. When one starts talking of divestment, the conversation naturally veers around to people losing jobs.

The first thing is for people to realise that this is the only way to save jobs. Because, now the capacity of the states to keep enterprises running on artificial respiration is over.

In the National Textile Corporation, there are 119 mills. Guess how many are working to full capacity. Only twenty-five. If you take just the amount spent by the government in paying wages to workers of factories that are physically shut, it is around Rs 7 billion a year. That is the central government alone.

Factories are locked, but this is what is going on. Eventually, what might happen is that you may push the government not to do it this year. But two years later, there will just be a collapse.

Second way to prevent retrenchment is to ensure that the new company becomes vigorous and grows. For example, Air-India: there are 23 planes. Average age: 14 years. But, the average age of Singapore Airlines' planes is two-and-a-half to three years.

To fly these 23 Air-India planes, the staff is 18,000. Now if you say there is fear of retrenchment, then you have to lower the man-plane ratio. That is the only way to make the enterprise profitable again and enable it to have a larger fleet.

If you expand the fleet from 23 to 53, you have a better plane-man ratio. Let us think of those ways. And not say that I am sitting with 23 planes, please do not retrench me.

In the small little divestments that have taken place like Modern Foods and Balco, no retrenchment has taken place.

We have provided that in the first year there would be no retrenchment. If subsequently, there is any retrenchment, then the new company shall have a voluntary retirement scheme that will be as generous as the one that prevailed at the time of divestment.

Part-II: 'These are not crown jewels, these are bleeding ulcers'

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