|Feb 7, 2000|
|RIGHT ANGLE |
Reforms Are Populist Too
The Government must grasp that disinvestments is good politics.
By Swapan Dasgupta
The President of India, it should now be evident, is no disinterested constitutional umpire. He sees himself as the nation's conscience. This was the unstated tone of his Republic Day warning against an emerging "counter-revolution". Although the threat was presented as "social" and a result of lopsided growth, he was targeting a larger phenomenon -- the efforts to dismantle the Nehruvian "commanding heights".
It is monumentally naive to imagine that change can happen just because the electorate voted for it and because common sense demands it. There are far too many entrenched interests to permit a bloodless transition to the millennium urges. The strike in Uttar Pradesh and the solidarity strikes by power workers in other states were a curtain raiser to more ferocious battles ahead. The Government showed commendable resolve this time, helped by public opinion. Now, can it keep it up?
It all depends on whether or not the Atal Bihari Vajpayee Government knows its own mind. In his Lok Sabha speech on December 17 last year, minister of state (in charge of disinvestment) Arun Jaitley provided very revealing statistics. The government, he said, has invested nearly Rs 95,000 crore in the public-sector undertakings (PSU) by way of equity. Together with the financial institutions, the total amount invested is nearly Rs 2,00,000 crore. Since 1991-92, the government has also ploughed another Rs 61,968 crore into PSUs to earn for itself a dividend of Rs 9,971 crore. Another Rs 18,288 crore was realised through the sale of PSU shares. "The return," Jaitley concluded, "we have got out of this entire national resource ... over a period of nine years is too low."
If the rationale behind privatisation is only to cut the budgetary deficit it is very unlikely that the process will proceed beyond the sale of a bakery, a cycle factory and, maybe, a few ramshackle hotels. Indian Airlines, a PSU targeted for the shift to the private sector within a year, is no longer in the red. In that case, it will be argued, why should the Government relinquish control? The Government's own arguments are in danger of being used by the socialist lobby to press for the status quo.
To circumvent this hurdle, the Government has to conceptualise disinvestment differently. It's not enough to talk of utilising taxpayers' money efficiently. That's too abstract an argument. It must raise a fundamental question: should the government be making steel, running hotels, mining coal and providing telecom services in the first place? It won't, however, do to merely stress the negative. To secure popular backing, the government must be clear what it should be doing.
It's all about positioning. Opponents will paint reforms as lacking compassion and bypassing those on the margins of the market. To counter this, the government must demonstrate that health, education, irrigation, defence and communications are the real challenges and priorities. Not subsidising the inefficiencies of babus.
A decade ago, Margaret Thatcher and Ronald Reagan showed that reforms have a strong populist dimension and can win elections. Our ministers must take political, not just economics lessons, from them. Privatisation is just the catalyst for the real counter-revolution.