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Why is privatisation still a dirty word?
Written By murali772 - 12 April, 2012
Corruption Privatization Citizen Reports Quality Economy monopoly India
Debates & opposition concerning these issues are part of this process & those that oppose cannot be termed 'vested interests' by those that seek 'speedy' privatization with claims that the aam-aadmi is paying a huge price & that privatization has already made things move towards services becoming world-class (whatever that means) .
When a comment as above was made supposedly in response to a post I made (check this), I thought the entire matter called for a separate debate, and hence this blog.
World-class (whatever that means):
I suppose nobody would deny that Indian products and services have come a long way from the pre-liberalisation times when the public sector was supposed to dominate the commanding heights of the economy, except of course where liberalisation hasn't happened - more specifically in the critical infrastructure areas like power supply, water supply, public bus transport services, railways.
And, though not much of a globe trotter these days, unlike many of my worthy friends here, I dare say that our airlines, telecom, insurance, banking, TV/ radio broadcasting, courier and such services are today comparable to the best in the world. Yes, my info is not necessarily first hand, and as such, I could stand corrected if I am wrong.
Vested interests:
Yes, I admit not everybody who is not for change, inspite of the overwhelming evidence favouring it (which is also largely not denied), does it because he/ she is harbouring vested interests. But,'vested interest' can even be driven by non-pecuniary benefits - like when you support a temple, dedicated to your favourite deity, even when it encroaches onto the footpath, which action is against overall public interest.
That said, while I am not sure if the PM had any concrete basis in making the allegation that the Koodankulam agitation was funded by outside agencies inimical the country's progress, I have often wondered how many of the 'professional opposers' sustain their activities.
Apart from vested interests, the reasons can be any or a combination of the following -
a) ideology;
b) old-world romanticism (check this);
c) maai-baap sarkaarism (only government can be trusted to do everything);
d) patriotism;
e) resistance to change (status-quoism);
f) fence-sitting tendency;
g) wanting to be seen to be siding with the underdogs;
h) wanting to be seen to be politically correct;
i) fear of the unknown;
j) fear of private sector marauders who could exploit a situation to the hilt to the detriment of the environment, given the poor regulatory regime (actually, even Coal India's and other PSU's track records are not too good on this score, either);
k) fear that unless the regulatory mechanism is fully and perfectly in place, the private sector will run riot;
l) opposing for opposing's sake;
m) opposing since it's supported by somebody you have a specific dislike for;
n) plain cussedness;
o) guilt complex out of availing world class services, even as the poor are getting a raw deal even on essential services (provided by the government);
p) fear that the private sector will make huge profits, even if in the process you get better services at cheaper prices, and the players pays their taxes;
q) fear that the Corporate sector will become all too powerful and an uncontrollable lobby;
r) Corporate sector's inherent drive for limitless growth, and its impact on the environment;
s) the ever-widening gap between the rich and poor.
The list has been compiled by my understanding of the reasons why many of the people I normally interact with are not prepared to come out openly in support of privatisation/ outsourcing, that extending even to the few who will perhaps go to the extent of saying 'not over my dead body'. Well, the list is not comprehensive - may be others would want to add on, as we go along.
The reasons listed at q,r & s are actually mine. But, against 'q', I would like to think that if the mecca of capitalism can elect an Obama for its President, humanity has a way of correcting the excesses. And, the way economic growth has more or less plateaued out in the developed world, shows there is after all a limit for growth - point raised at 'r' (either way, we are far from that stage, and fast-paced growth is important for us - check this. The important thing is to ensure that the growth moves along the right lines). Further, many who become rich, eventually turn to philanthrophy - point made at 's'.
Whatever, there is no gainsaying the importance of an effective regulatory regime, and that is all the more reason why the government should be concentrating on that. Also, since its all important role as the regulator gets badly compromised when it becomes a player in addition, as I have been repeating ad nauseum, it should start easing itself out of the role of the player, except where its presence is essential.
Muralidhar Rao
PS: Be warned, in future, if you oppose privatisation/ outsourcing, you will be fitted into one of the above slots :))).
COMMENTS
murali772 - 11 August, 2012 - 11:43
Suggesting that the nation would deteriorate if education, health, water supply and power sectors were privatised, noted Kannada writer and Jnanpith awardee Dr U R Ananthamurthy said the BWSSB should not be privatised. He was speaking at the 121st birth anniversary of B R Ambedkar, organised by BWSSB SC/ST Employees’ Association on Thursday.
The writer lamented that as education was privatised, many children were not getting what they needed.
“Due to privatisation, chances of people getting exploited are more,” said BWSSB Chairman Gaurav Gupta. He added there were many public sector undertakings which have faired well including the BWWSB.
For the full report in the New Indian Express, click here.
Dr Ananthamurthy's views are well-known, and that's why I presume the association lot chose him as the chief guest. I think I would classify his reasonings as under a,b,j, q,r,s in the list in my opening blog. And, as for Mr Gaurav Gupta, I think I need to add a new classification as 'playing to the gallery'.
On the role of the private sector in water supply outsourcing (it cannot be privatisation here), there have been enough debates on PRAJA, which can be accessed here and here. Likewise also in each of the sectors, lised out by Dr URA, all of which may also be accessed by a 'search' on the site.
And, on the question of exploiting workers, there is none to beat the government agencies, as clearly seen here.
Have you ever seen a defaulter take public transport?
kbsyed61 - 11 August, 2012 - 16:04
Source - Times Of India
"...Have you ever come across the promoter of a company that has come for restructuring take public transport?" KC Chakrabarty, deputy governor, Reserve Bank of India questioned bankers at a seminar on corporate debt restructuring organized by the Centrum group. According to the deputy governor restructuring of loans has been heavily biased in favour of large borrowers and had been predominantly done by public sector banks. .."
"...Mr Chakrabarty said that the concept of promoters brining in own equity has been given a go by. "Equity does not mean money that is brought in from another lender. Today we have these so called private-public partnership projects (PPP) but where are the private funds in them? When a promoter raises funds from lenders he is bringing in public money" said Mr Chakrabarty. Responding to statement from bankers that large projects were being held up for want of government clearances, Mr Chakrabarty said that in cases where there is uncertainty about government clearance there is even more need to ensure a higher component of equity. .."
what is the point being made???
murali772 - 12 August, 2012 - 18:07
Have you ever come across the promoter of a company that has come for restructuring take public transport?
The answer is no. That is because the public transport system in the country (dominated by the government service providers) is so pathetic that once people get used to other means, they would rather commit suicide than switch back to using these services. And, that's what Mr Sheth, MD of Raj Travels, arguably the 4th largest travel company in the country, did recently, when the recession found his business too badly steeped in debt. And, there are plenty more such examples where they come from. Is that a satisfactory situation then?
As compared to that, a V R S Natarajan, the ex-MD of BEML, is now enjoying all his ill-gotten wealth, secure in the belief that the law can never catch up with him. And, there are plenty of examples of such public sector honchos too.
The law has caught up only with a Sukh Ram so far, that is when he is anyway just carrying on with one foot already in the grave.
According to the deputy governor restructuring of loans has been heavily biased in favour of large borrowers and had been predominantly done by public sector banks
I was running a fair-sized operation, even though in the SME sector, and having been banking with the largest PSU bank, I know the truth behind this statement. Nobody need tell me.
- - Mr Chakrabarty said that "in cases where there is uncertainty about government clearance there is even more need to ensure a higher component of equity. .."
So, why for instance did they get carried away by Vijay Mallya's flamboyance, and fund the acquisition of Deccan Aviation by his KingFisher, even though KingFisher had never made profits right from the beginning? The only reason why KingFisher is still afloat today is because the government doesn't know how to answer for the huge losses its banks will then suffer. If KingFisher had been funded by the private sector banks, they would have forced its winding up long ago to cut their losses, rather than chase a pipe dream, particularly given the present government's indecisiveness.
And, if we had a decisive government, perhaps a consortium of private bankers would have teamed up with an international aviation major and funded the revival after buying over the equity from the government banks.
That brings me to another point. When a private sector operation runs into serious problems, the revival (MAYTAS, taken over by Mahindra's) or closure (there are too many to list) all happen very fast, unlike in the case of the public sector - NGEF, Mysore Lamps, ITI (check this), HMT, Cycle Corpn of India, the list is endless, all of them eating up good tax payers' money.
Anyway, all of this does not detract from the fact that the opening up of the aviation sector has helped the country, its people, as well as the economy, right? And, for heaven's sake, you are not saying that we should revert to earlier days of IA monopoly, right?
Ah yes, I forgot. The point you are perhaps making is that as the private sector is not all of angelic, right? But, Sir, who had ever said that?
And, finally, do you want to figure out which of the factors in the listing, I had made in the opening post, would apply to you? I am making an overall study - some apply to me too.
murali772 - 27 December, 2012 - 07:19
Calling for a need to define lobbying through a legal framework to differentiate between advocacy and bribery, Corporate Affairs Minister Sachin Pilot has favoured disclosures by companies and industry bodies about their representations to government on specific policy issues.
"I think that time has come to define what is acceptable and what is not. What is legal and what is not legal. I think, in most countries we have that definition, but in India, it is pretty vague. It is wrong to assume that lobbying means bribery, but some people allege that it is bribery," Pilot told PTI in an interview here.
There has been a heated debate within Parliament and outside in the recent past on lobbying after it came to light that various global companies, including retail giant Wal-Mart, lobbied with the US lawmakers to push for their entry and other business interests in the Indian markets.
For the full report in the Indian Express, click here.
It was inevitable that it had to happen. The answer then plainly lies in stregthening the democratic processes and its various institutions.
murali772 - 19 April, 2012 - 05:53
Another aspect of privatisation that is worrisome, as far as I am concerned, is its tendency to promote consumerism, and its serious impact on the environment. This is already covered under 'r' above; but, I thought needed specific emphasis.
As such, whereas we had a strong re-use, re-cycle culture earlier, it is slowly giving way to 'use & throw" culture.
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