A drain inspector’s report

So, when there is a paradigm shift from public to private ownership, he uses the same method as when there is a shift from one private ownership to another private ownership. It is to factor in the paradigm shift that the Opposition asked, among other reasons, for a White Paper. That was refused.

When the Opposition, as an alternative, asked for a standing committee of Parliament on disinvestment, that too was refused. They refused because they are not interested in a rational programme of privatisation. Theirs is an ideological assault on the public sector. They have decided to sell, sell, sell, without first asking what to sell, how to sell, to whom to sell.

The first principle of disinvestment/privatisation which the Opposition has been urging is that it begin with loss-making public sector units that are of the least strategic importance to the economy — such as hotels. Hotels like the Ashoka and the ITDC hotel at Kovalam were, in their time, path-breakers in conference and holiday tourism. Times change, and if these public sector hotels have not changed with the times, there is no problem in privatising them — at the right price. But that, alas, is not the purpose of the Shourie expose. His aim is to bad-mouth an obvious, and in itself, minor target, to avoid argument on the really big issues. He would have us believe that because the Taj or the Maurya makes a profit when the Ashoka does not, let the public sector come to an end; let private enterprise alone reign.

Which brings us to the 250-page printed report, ‘Performance of Public and Private Sectors’ submitted obsequiously by SCOPE (the Standing Conference of Public Enterprises) to Shourie himself two long years ago. A government willing to engage in rational debate should have no difficulty in considering what its own employees have to say — for SCOPE is a think-tank of public sector professionals. Since no one is going to give me three columns to sum up their findings and suggestions, let the chapter headings of the SCOPE report speak for themselves: ‘Public Sector’s Star Performers’; ‘Many More Public Sector Performers’; ‘The Public Sector Marches On’; ‘New Face of the Public Sector’. All lies? Then take the next three chapter headings: ‘Private Sector Failures; Case Studies’ (i.e. cloning Shourie without the vitriol); ‘Private Sector Failure Unabated’; ‘The Defaulting Private Sector’. Undeserving of even consideration?

Right then, let him listen to his colleague, Steel Minister Braj Kishore Tripathy, who in the week that Shourie’s articles appeared, circulated two pamphlets whose titles, again, tell their story: ‘Resurgence in Steel’ and ‘The Year of Resurgence 2001-02’. Before the recent resurgence, private sector losses in steel (as a percentage of net worth) were far greater than that of the public sector, even as the resurgence that minister Tripathy talks about has much more to do with SAIL than Tata Steel or any of the rubbishy new units set up by private sector fat cats. Hence the question to the Drain Inspector: what have 41 out of 42 loss-making ITDC hotels to do with the principle of divesting or privatising all public sector units? Shourie would have enlightened us more if he had compared private sector performance in hotels with ITDC hotels of the same categories in the same time-period; or compared the loss-making years of the ITDC hotels he rubbishes with their profit-making years. Had he done so he would have learned, as revealed in the SCOPE report, that there are good ’uns and bad ’uns in both sectors, and that the answer, therefore, lies in professionalisation not ownership.

Ownership has nothing to do with performance. There are quite as many stars in the public sector as in the private, even as there are quite as many flops in the one as in the other. The answer lies in professionalism and sound business ethics. It is the absence of both that is responsible for the humongous Rs 70,000 crore in non-performing assets that private enterprise has looted from the banks and the close on Rs 100,000 crore in outstanding tax dues that private players (almost all the really filthy rich) have disputed over the years. The public sector indulges in peccadillo, the private sector in scams — ‘‘bomb-shells hidden in the boom’’, as the prime minister has so poetically put it. In this very newspaper, the editor, in the week after Shourie, published a much-lauded piece on the economic crimes of the private sector. A good drain inspector should inspect all drains.

Where the private sector has professionalised itself and works to a code of business ethics, the economy gains. Equally, where the public sector professionalises itself and works to a code of ethics, the economy gains. The SCOPE study constructively addresses itself to this imperative need. It recommends the reduction of government ownership to 49 per cent in order to insulate public sector professionals — who have proved themselves more than equal to the best in the private — from political interference, and, thus, from unethical behaviour. Where there may be good reason to keep government ownership in the range of 51-100 per cent, the answer lies, I believe, in a constitutional amendment — a single explanatory footnote to Article 12 — which would exempt the public sector from being regarded as an arm of government, thereby undoing the Supreme Court judgement which, in the name of accountability to Parliament, legitimised political interference in the day-to-day running of public enterprises.

These are matters worth reflecting upon. Contemplating the drain is not.