The following is the text of an interview George Fernandes gave The Indian Express’ Debashis Chaudhuri when he was president of the Samata Party in 1998. Fernandes passed away on Tuesday after a prolonged illness. Excerpts:
You have been talking about providing protection to the Indian industry, what kind of protection do you think is appropriate?
Protection would primarily mean providing a level playing field for the domestic industry which it has been trying for even during liberalisation. But it never got it. Secondly, it would mean that competition in whatever form should not put the Indian industry at a disadvantage vis a vis multinationals. The country should not become a dumping ground for the industries from abroad. The chemical units in Gujarat including BMT are at the receiving end because of dumping and there is absolutely no action on part of the government. Thirdly, the volume of export. Obviously, we are not doing very well in exports and we would have to find out the reason for it. Whether it’s quotas or tariffs, or, any overt or covert actions of some industrialised countries which is making us fall behind.
In case there is a coalition government with BJP being the largest party, what do you think will be its impact on overall economic policy?
I do not think coalition has any effect on overall economic policy as such. If its a matter of policy or framework and is part of our domestic as well as global commitments then I do not visualise any problem with regard to their implementations. We have instances where coalition is the order of the day. In our case, this is the third experience of such a case. Whether it is the French economy or the Italian economy most of the post-war European economies prospered even when governments were coming and going. So I don’t think there is any substance to that fear.
You have been thinking of some disincentives to foreign companies especially in the consumer goods. What are the kind of measures you have in mind?
I am thinking more in terms of incentives to the domestic companies rather than disincentives to the foreign companies. The western companies have colossal amount of wealth. Take for instance our soft drink industry where two major Indian players were reigning when Coke and Pepsi came. And, now the entire Indian market have been captured by them. Coca Cola’s profit last year was $4.13 billion. Our total market for soft drink last year was less than Rs 3,000 crore. In this situation how do you think our companies can withstand such an assault?
I think that the question is to give incentive cover to the domestic industry rather than providing disincentives to anyone. In case of a by and large free domestic market, the foreign companies can easily dominate the Indian companies, undercut them. These are the areas where protection is required. Adequate incentives should be provided to the Indian industries. I don’t see any reason why the country should become the graveyard of the domestic industry.
Some of the sectors have been asking for anti-dumping duties. What is your opinion regarding that?
A programme should be worked out on a priority basis rather than a vague assurance.
How would you rank the sectors in terms of their priority for securing protection from the government?
First priority would be those sectors which are facing sickness like the small scale sector. Investment is needed where jobs are created not affecting existing jobs. Unemployment is the most crucial factor while framing economic policies. There are 40 million registered unemployed and in the rural sector the semi-employed number another 100 million. The price that we are paying is in terms of all types of social tension. It is distressing that all the debates pertaining to the middle and upper middle class in India are on the quality of goods. People are arguing that protection should be removed so that there can be competition and we can get the best in the world. All those are important but as a nation we should see to it that no one goes to bed hungry. Our targets have to be in that direction.
Giving protection and incentives to Indian companies, some feel, is though a colourful statement yet cannot be implemented. On the other hand, statements that Coke and Pepsi should go out can have a serious effect on employment situation?
I have never said that I want to throw out anybody. People keep saying that I threw out Coke but I was well within law to ask them about the formula they were so secretive about. The Indian legislation stated that in such a situation I could either ask them to go out or to dilute their equity to 49 per cent and they opted for the first. However, ever since Coke and Pepsi have entered the sector, the smaller players, the bottlers, the entire industry is being bought out by them. I see no reason why they should be allowed in such low technology sector. Even entrepreneurs like Ramesh Chauhan have come to me later after being bought out and repented.
I don’t see any reason why foreign companies should not be allowed in hi-technology areas. But not protecting domestic companies in low-technology areas would mean allowing economic invasion by foreign powers.
There is a gap between what the companies mention in the agreements and their actual practice. The government should initiate investigation on these lines.
Do you think government spending needs to be stepped up in certain areas?I think the areas need to be properly identified. Free market does not mean that the government should be a referee while others come and play football on our grounds. The government’s intervention is a must for the prosperity of the domestic industry. Even the American President intervenes in order to protect the interest of the US companies.
As the union railways minister I had to negotiate loan with the World Bank and I was pressured regarding the entry of Pepsi in the country. I was taken aback that World Bank, which is not an agent of Pepsi, is telling us that entry of Pepsi is the litmus test for sanctioning loan. I told the negotiator for the World Bank that we are not against allowing American companies in hi-technology areas, which was evident in shortlisting General Motors and General Electrics for projects of the Indian railways, but in certain areas we need to be circumspect.
Don’t you think you can face similar problems while negotiating with World Bank once you are part of the next government?
It is too early to comment on this since no one knows who will finally be part of the government. I do agree that the government has to negotiate but it should do so in national interest. The entire market is lying empty while the investment is coming only in sectors like capital goods and automotives. So much noise is being made that the world is watching, sensex is falling. I am not impressed by sensex since it rises when Bal Thackeray comes to the crossing and announces something. It is a gambler’s index providing a few their daily kill.
What do you think should be the policy?
Wherever there is breach of law it should be treated with seriousness. Ifan Indian breaks the law, he goes to jail. Somebody from the Mahatma Gandhi family has been facing such consequences currently. However, if any of President Clinton’s relative does something similar one phone call can ensure entertainment from the country’s prime minister and red carpet treatment. I think equality before the law should be ensued for both Indian and foreign companies. I do not believe that western capital is waiting for signals. They have the money and they want to dictate terms. But in such a situation we should follow China. In case of corruption, the erring companies should face punishment.
What are your views on the disinvestment of public sector units?
I personally do not feel that disinvestment should take place in this manner. I think disinvestment should be reviewed and our government should set up a commission for both disinvestment and privatisation of the public sector. After all the money that has gone into the public sector is the tax payers’ money and at a value which is not the same as today. Then how come the shares can be transferred at Rs 8 per share. Would you allow closure of the terminally sick?
In a sick unit, workers are often targeted as the cause of sickness. As a former industry minister and MP, I have studied carefully that in nine out of 10 cases, bankers are the cause of sickness. They do not play their role when required. We need an integrated plan to address the real problem and identify the real problem maker without pressuring the government exchequer. What kind of message would you have for the MNCs and those looking for entry?
First, they have to be law abiding and should be prepared to be treated at par with the domestic companies. Second, there would be level playing field prepared for the domestic companies. Third, the core area is export where they should be focusing upon. I would like to make it clear that I am not anti-MNC but, pro-swadeshi.
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