The Telegraph
Since 1st March, 1999
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- Hanky panky in private units is no lower than in public ones

Is it all ideological, an expression of deeply held values, the ire votaries of economic liberalization exhibit toward public sector entities' There can of course be the point of view that a government, any government, has no business to stray beyond the confines of defence and law and order; the social contract entered into by citizens does not entitle the authorities to interfere with the processes of agriculture, industry or services, or, for the matter, those of education, culture and literature too. All such incursions, it will be maintained, constitute infringement of individual freedom, citizens must not be prevented from unfettered decision making in the different walks of life. To do so is to stifle their creative genius.

A subsidiary argument is often added, based on the belief ' in some instances, conviction ' that the public sector is organically less efficient than the private sector: if the criterion of efficiency is maximization of the rate of return, it is private enterprise which is always likely to excel. A government entity is subject to many operational constraints, including political ones, that affect uninhibited profit realization; no such constraints hamper private enterprise. And, if it is a question of transparency, private firms triumph all the way; their activities are an open book and subject to the rule of law, whereas government undertakings work under a veil of secrecy, skeletons are not allowed to come out of the cupboard.

Is there not more than meets the eye in the on-going debate' Since the United States of America is supposed to be the fountainhead of private enterprise, a reference to a controversy raging in that country should not be considered as beside the context. Apart from his war on global terror, President Bush has set his mind on another target: the overhaul of the country's social security system currently under public aegis. The system, in his words, is in a 'crisis'. It is however awfully difficult to locate the nature of the 'crisis'. Pension payments under the US social security system are made out of collections from the payroll tax. Till now, the annual yield from the payroll tax has consistently exceeded outgoes. The surplus in 2005 is likely to be around 180 billion dollars. According to the most conservative estimates, this surplus would continue till 2028, and the total accumulation is to reach 3.5 trillion dollars. The reserves of the social security fund might run out only as late as in 2042 because of a growing bulge in the proportion of old people in the total population. This projected event is still some four decades away. George W. Bush's claim of a crisis in social security therefore seems to be a wild exaggeration. With some adjustments in payroll tax rates and prudent investments, there might be no crisis even in a distant future.

Bush and his associates will not go along. They are keen to disband the government-managed social security fund and hand it over to private groups. This eagerness to scuttle social security certainly has some ideological roots. Those who strongly believe in the economic philosophy of no free lunch would have little sympathy for people who depend on government hand-outs in their old age. The latter, they would argue, must make their private arrangements for survival during retirement; the government must not encourage them to look toward it. This argument is however based on shallow reasoning, for when citizens contribute to the payroll tax, they are actually providing for their future, it is no free lunch. The real reason for targeting the social security system lies elsewhere. The Republican administration is under strong pressure from lobbies that are its natural allies. Private investment firms and brokerage houses are casting covetous eyes on the billions and billions of dollars of collections from payroll tax. Were all this money to come under their command, the stock exchange would soar and soar, and profits registered by tycoons would scale hitherto unheard of heights of prosperity.

Ideology is bunkum, class interest has impelled Bush to plan for the dismemberment of the social security network. Those arguing in India for the progressive disinvestments of the public pension fund as well as of the profit-making public undertakings are perhaps not behaving any differently. Public enterprises such as the SAIL units, the Oil and Natural Gas Commission and Bharat Heavy Electricals were built in the early decades of the post independence period when the private sector was nowhere in the picture. Raising the kind of money needed to construct heavy industry units was then beyond the capability of private entities. That apart, the gestation period was long for such units, and the rate of return was relatively low in the initial stages. One remembers an occasion in the Sixties when the free enterprise lobby led by Minoo Masani wanted the Bokaro steel plant to be located in the private sector and assigned to the Tatas; J.R.D. Tata hastily came out with a statement expressing his inability to gather resources adequate for such an ambitious enterprise. He was quite categorical: the government should take charge of the plant.

Since the struggling years are behind and these navaratna units in the public sector are showing lush profits, the disinvestments lobby has chosen to bestir itself. It was all right for the government to toil and trouble so as to ensure the profitability of these units; but not to sell them off now to private parties, who could sit back and enjoy the easy-flowing profit, will supposedly be a sin. It will also be difficult to prove that if Bhel or ONGC were placed in private hands, profit-making will be any greater. Besides, public sector units are subject to a number of public scrutinies such as by parliamentary committees and the comptroller and auditor-general, from the rigours of which private units escape. In any event, recent American economic history is a great educator: hanky-panky in private enterprises is, to say the least, no less rampant than in public units.

The case for disinvestments of the country's public sector units therefore cannot be based on the criterion of either efficiency or transparency of operations. The campaign for privatization merely reflects a heightened greed on the part of corporate sharks. It is little use pretending that many amongst those currently at the helm of the country's administration do not suffer from a natural sympathy for the corporate world. It is even possible to identify one or two ministers who were till the other day lawyers in the service of private corporations, including transnational corporations. Not everybody in our time has the guts to say, in the manner of Dwight Eisenhower's first defence secretary, Charles Wilson, who was formerly president of General Motors, that whatever was good for General Motors was good for the United States. That does not however mean that a handful in the Union cabinet in New Delhi do not hold identical sentiments in private: whatever is good for Tycoon A or Tycoon B is, they honestly believe, good for India.

Given this frame of mind, it is hardly surprising that these ministers place their own interpretations on the common minimum programme and try the sneaky way to ruin profit-making public enterprises. No question of any burden of ideology or values here; the disinvestments-minded ministers are solely driven by the urge to augment the profits of their class brethren in the corporate world. Here too, George W Bush has shown the light, as he has done in several other areas.

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