It is a testimony to our commitment to socialism, enshrined by the senior Mrs Gandhi in our Constitution, that it remains alive and kicking: Even the large number of crorepatis amongst our parliamentarians, swear by socialism. And, the way the Congress Party’s partners in government, in particular the DMK and the Grassroots (Trinamool) Congress, have began their innings would ensure that the Congress does not feel the absence of the Left as its ally. For example, in the context of the disinvestment programme, Ms Kanimozhi, the DMK leader, said that “Government should not look at selloff as an option for generating revenue. The country has been following the socialist model and it should stay with it.” She is quite right, of course: The basic tenet of socialism is public ownership of the means of production.
But such admirable commitment to the Constitution apart, one keeps wondering about the wisdom of keeping, say, Air India in the public sector. It is incurring huge losses and needs Rs 15,000 crore of public money to carry on at a time when the true fiscal deficit is reaching levels not seen since 1991. It is obvious that the funding needed by Air India (and other PSUs too: there are 33 loss making ones which have so far received cash and non-cash support of the order of Rs 30,000 crore, as reported by The Economic Times on June 10) will have to come at the cost of the resources needed for poverty reduction, rural infrastructure, schools, etc. It is difficult to imagine what public purpose is served by keeping Air India under government ownership. Private airlines providing world class service are already flying on the global and domestic routes. Surely there are more socially worthwhile uses for public resources?
The case of BSNL is no better. Its share of the telephony market has come down to barely 13 per cent and the private sector has done an excellent job of carrying communication services to the masses. Like most public enterprises, BSNL continues to incur huge opportunity costs: There has been an 18-month delay in inviting bids for capacity addition. The procedure followed has led to a court case being filed by Nokia Siemens since its bid was disqualified; it is anybody’s guess when the matter will get resolved. In another case involving BSNL reported recently, it was unable to sell thousands of data cards carrying the picture of Preity Zinta because by the time the cards reached Pune, the advertising contract with Ms Zinta had expired!
The big problem, of course, is the bureaucratic culture from which too many of our public enterprises and schemes suffer from — and one cost a bureaucracy never understands is opportunity cost. Recently, a Hong Kong based consulting firm undertook a survey of the efficiency of civil servants in 12 Asian economies. Singapore came first and India last, trailing Indonesia and Philippines. Too much of our bureaucracy is not only inefficient and corrupt, but it is all-pervasive in its influence; even most of the supposedly independent regulators are manned by retired bureaucrats. Another characteristic of our bureaucracy is its complete lack of accountability for anything it does or does not do. And, liberalisation of the economy over the last couple of decades has not really reduced the power of the bureaucracy.
As for competence, consider one recent example: the utter confusion following the notification of guidelines on as important an issue as foreign direct investment. Is anybody accountable? Five years back, on coming to power, Prime Minister Manmohan Singh had made a commitment to giving priority to administrative reform and improved governance. He has been unable to do anything worthwhile on the issue in his first term. Would he get any better results in the second?
The public sector will never get the autonomy it badly needs because the netas and babus will not give up the powers of control over the units, both for personal benefit and for patronage. And, so long as the bureaucratic stranglehold remains, it will breed complacent, not “learning”, organisational cultures.
Meanwhile, at least partly as a result of the resources eaten up by public sector undertakings, the government is unable to spare adequate money for services it alone can perform: Judicial services and national security, to quote just two examples. On the first, as M. J. Antony wrote in this newspaper last week, “Starved of funds and personnel, the legal system is in imminent danger of collapsing”, and citizens face endless waits for justice. On the second, the series of investigative articles on “26/11: What went wrong?” in The Indian Express recently, evidence serious lacunae and inefficiencies even on such a vital matter as national security.
Apart from fiscal resources going to the public sector and starving more vital social services and welfare schemes, it is high time we recognise that the government’s managerial/administrative capabilities are nowhere near performing the minimum functions a state needs to with a modicum of efficiency. It is high time we change the constitutional commitment to socialism, and free at least some money resources.
