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Why is privatisation still a dirty word?

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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

Janata has long got over privatisation phobia, Mr PM

murali772 - 28 December, 2014 - 10:58

Setting all speculation to rest, Prime Minister Narendra Modi on Thursday ruled out the possibility of privatising Indian Railways. Addressing a gathering after launching a Rs 213-crore expansion project at Varanasi-based Diesel Locomotive Works, Modi said the railways was the backbone of India’s economic development and there was no question of privatising it. - - - - “What we want to do is that instead of putting the common man’s money into the everyday running of the railways, put cash-rich investor’s money and get soft loans from international agencies for greater development of the railways,” he said, adding that the railways’ huge land parcels at almost every station can be used by investors.
 
For the full text of the report in the Financial Express, click here.
 
The PM still seems to suffer from a hang-up that the country's janata largely continues to harbour a "privatisation phobia", originally created and perpetuated by pseudo-Socialists, over the past decades. He should realise that the times have changed, a clear indication of it coming from the result of a yes/ no poll conducted by "New Indian Express"(accessible at the bottom left hand corner of the page linked here), following his statement, which gave an overwhelming 85% "NO" verdict to the question "Do you support Narendra Modi's decision to not privatise the Railways?". 
 
Now, all kinds of charges that the poll was rigged; the sample may not have been large enough, etc, etc can be made. But, the fact of the matter remains that nobody would even have dared rig such outcomes (even if the charge be true, which is unthinkable) in the earlier times, fearing the backlash from the pseudo-Socialists. The pseudo's are clearly on the run now.
 
And, as for workers - the genuine ones have clearly understood the gains from privatisation, and are fully for it now; it's plainly the unionist mafioso, whose vested interests will suffer, the only ones standing in the way. It's surprising that the PM hasn't seen through this yet. 
 
Notwithstanding all that, what does "put cash-rich investor’s money - - -  for greater development of the railways" mean? Soft privatisation - if you want to call it that, or a harsher term would be "privatisation by stealth", which is what the Congress was upto, and which eventually led to crony capitalism.
 
Modi doesn't need to do that - the earlier he realises that the better. He can do it step by step, and in the case of Railways, perhaps selectively. But why, for instance, shouldn't a manufacturing unit like "Diesel Locomotive Works" be privatised straightaway?
 

a shortage is an opportunity for businessmen, either way

murali772 - 19 April, 2015 - 13:43

In the context of a debate over TenderSure (check here), when I cc'd a post I made on SaveKoramangalaYahoogroup to HU Yahoogroup (supporting the overall approach), a certain activist responded with
 
So the argument is we now make way for corporates to loot cities?
 
To which, I responded as below:
Indian business-men are renowned the world over as the most intrepid of the lot. As such, if there are shortages of goods or services, whichever the sector, they will see it as an opportunity to make a livelihood for themselves, and the ones better organised will flourish too. 
 
As such, because of the BMTC's incapacity (to use just a mild term) to meet the huge and growing demand, we have the auto, maxi-cab operations in the un/ semi-organised sector meeting part of the demand; the aggregated taxi services, and of course, the car and two-wheeler manufacturers in the Corporate sector, providing the means to meet the demand.
 
Likewise, because of the incapacity of BESCOM, you have the Katiabaazi (thieving by hooking up onto the power lines), wood-fired chulha's, etc in the un-organised sector, and the gen-set, inverter, converter, battery manufacturers, all largely in the Corporate sector, again providing the means to meet the demand.
 
In the case of water supply, you have the tanker operators, borewell sinkers in the un/ semi-organised sector, and the borewell rig manufactirers, bottled water suppliers, water purifier manufacturers, etc, all largely in the Corporate sector. 
 
So, either way, business-men, or Corporates will exploit (loot, if you want to call it that) the opportunity and make money. Well, anyway, that's what entrepreneurship is all about.
 
Now, it's extremely difficult to regulate the un/ semi-organised lot, their being largely mafia operations that don't care much about rules. As compared that, the Corporates largely play by rules, since reputation, brand value, etc, are important for them, particularly given the increasing vibrancy of our democracy, which has already landed up enough wrong-doers behind bars (and more are on their way). Yes, they will lobby hard to change the rules to benefit them, using their money power too. But, surely, our democratic process is increasingly providing a check on that too - witness the recent taming down of the tobacco lobby. Apart from all of these is also the revised maxims that Corporates have set for themselves, as stated by a good friend, on an earlier thread, as "Sustained Maximization of shareholder wealth is only possible if wealth and well being of society is also maximized in the course of doing business, and the triple p bottom line accounting - people, profits, planet".
 
As such, if simultaneously the Corporates, who are manufacturing cars/ two-wheelers, are incentivised to switch at least partly to operating bus services; the gen-set/ battery manufacturers are incentivised to switch to power distribution; the water bottlers are incentivised to switch to water supply, we will be making the most effective use of our scarce resources. And, these three being key infrastructure areas, on which the country's economy, apart from the quality of life of even the aam aadmi, largely depend, we cannot afford not to have it any other way, either. Collectively, we need to make it happen. 
 
When giving this sermon, I am presuming that many have not quite appreciated these aspects. Well, that's were I may be wrong. For those, I would suggest a reading of this blog (my opening post in this blog) to check where they see themselves. 
 
Since these exchanges are generic in nature pertaining to the whole subject of professionalisation (which I consider synonimous with "privatisation"), I thought I'll post it all here. 
 

Everybody has to obey rules,

abidpqa - 2 May, 2015 - 17:32

Everybody has to obey rules, propreitor or corporate. There is no will on part of govt and police to control unorganized sector because of conflict of interest and illegal monetary influences. Also these methods can be used by big corporates.  The illegal methods have to be opposed whoever is doing it.

The solution of inviting big corporates may not work because of core competency. I doubt whether the theory is right but a manufacturer need not be interested in running bus service. Boeing does not run airlines or is at least not a major player. Indian coroprates are running many divisions because of lack of competition also many are run just by financial control.

When fraud is abetted by Private Enterprise?

kbsyed61 - 17 August, 2015 - 22:00

Murali,

These are the reports that makes public lose the confidence in private enterprise. 

http://timesofindia.indiatimes.com/city/delhi/Discoms-inflated-dues-by-Rs-8000-crore-CAG/articleshow/48520042.cms?

"...The three private power distribution companies (discoms) in the capital inflated their dues to be recovered from consumers by almost Rs 8,000 crore, the comptroller and auditor general has said in its report on the discoms and claimed that there is scope for reducing tariffs in the city..."

Lobbies can be tamed; but, not the mafia

murali772 - 20 September, 2014 - 11:39

Christof Spieler moved to downtown Houston about nine years ago and began a reverse commute to a suburban office park. He took the No. 9 Gulfton Metro bus because he liked to get things done during the ride and hated sitting in traffic, but the service left much to be desired. The bus didn't run very often (every 20 minutes or more, even at rush-hour); transfers were hard to coordinate; and the pedestrian infrastructure near the stops was terrifying (to reach the office, he braved five lanes of car traffic without a signal or a crosswalk).
 
"It really gave me a good feel of what the system's like," he says.
 
Fast-forward to today and Spieler now sits on Metro's board of directors. An engineer at Morris who also lectures at Rice, Spieler played an instrumental role in developing Metro's Reimagining plan—a dazzling redesign of the entire bus system that stresses all-day frequency and smart connections. But he couldn't have done it without his experience on Metro as a guide, which makes him Exhibit A for why the people planning America's transit systems, from board members to senior management to project designers, should be riders themselves.
 
For the full text in "The Atlantic City Lab", click here.
 
Well, none other than namma Ramaliga Reddy avaru stated this not too far in the past (check here). And, similar pious statements have come from other neta's and babu's too, but all to be forgotten within moments of their being said. 
 
I had visited Houston and Los Angeles some five years back, and generally got the impression that, like with their gun (read here for more on that) and health insurance lobbies, the automotive lobby too was too powerful to allow for any meanigful advancement of public transport services. A reading of this article raises the hope in me that even the most powerful of lobbies can give in to reasoning, and work towards the overall betterment of humanity. And, when that happens, true democracy asserts itself, like the actual user here getting invited to the board of directors of the Houston Metro (their bus service).
 
As compared to that, in Namma Bengaluru, as also most of the rest of the country, the public utilities are in the hands of confederations of mafia's, presided over by the neta, any change becoming that much more difficult. All in all, this strengthens my stance for ushering in competition/ out-sourcing/ privatisation, as is most suitable to the specific service.
 

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