Another partition of India

The then prime minister, Jawaharlal Nehru, did not give up. But before he could take any step, he received a letter from Lord Mountbatten, who lived in the UK after retiring as India’s governor general. Mountbatten wrote that India would be wasting its resources by engaging itself in the exploration of oil because it had none. He said the various petroleum companies in London had confirmed his view.

Nehru remained undaunted. He entrusted the job to K.D. Malaviya, a minister in his cabinet. He took the first opportunity to visit Moscow. The Soviet Union called the Western companies’ bluff and found huge reserves of oil in India. New Delhi meets today roughly 30 per cent of its needs from within the country.

The proposal to give others equity participation in the Oil and Natural Gas Corporation (ONGC), a public sector undertaking, makes one feel that we are faltering in our determination to be self-sufficient. We have already sold proven oil fields for a song. The question arises why we should be disinvesting in a company like the ONGC. It is making good money and the oil, whether drilled from the field or processed in a refinery, is still a strategic commodity for the country.

Disinvestment is one thing. Making a fetish of it is another. Selling hotels was a welcome step. The government should not have ventured into the field in the first instance. Getting rid of losing undertakings, if they have no strategic value, is also understandable. But selling wholly, or partly, the profit-making public sector undertakings to the competitors makes little sense.

It is no defence that if shares of a losing public sector undertaking can be offered, why not those of plus companies? There is nothing wrong with it except that it is bad business and bad thinking.

Why and how a particular undertaking is selected for disinvestment is seldom spelt out. The matter is not discussed even with the state where the undertaking is located. The practice seems to be that annual target in terms of money from disinvestments is fixed first.

The process to pick and choose public sector companies to be covered begins later. It is like a slaughterhouse where the criterion is that the neck of the sacrificial animal should be fat enough to fit into the slot where the chopper falls. The determination of price, although left to private hands, is not all that favourable.

The book value has relevance. But imagine the days when the scarce funds needed elsewhere were diverted to public sector undertakings so that the country was not buffeted by pressure, which the procurement of some commodity might exert.

Practically every public sector undertaking shows the determination to stay sovereign.

Behind every such organisation, there is a saga of sacrifices, tears and hard work. That price is not computed when the disinvestment process gets into gear. Even otherwise, there is a rush to disinvest even if the price is low. The Comptroller and Auditor General of India has said in a report on the assets of Bharat Aluminium Company that it was undervalued by Rs 300 crore. Ministers and bureaucrats, in that order, have made a mess of the undertakings. They have them as their fiefdom and milched them to their benefit or that of the party in power. But this is no reason to throw the baby with the bath water. Why has there not been even one case against the chief of any public sector undertaking for slovenly performance?

The undertakings need to be independent like the ones in the private sector, not disinvested without rhyme or reason.

Disinvestment is, however, not the only step that needs to be looked into. The entire gamut of economic measures, particularly the part that relates to reforms, needs to be reviewed. The main fallout from what has been done so far is the further marginalisation of people who are already on the margin.

Thousands of small units have closed down. Multinationals have pushed out the indigenous companies from certain fields. They, in turn, have pushed out cobblers, blacksmiths or weavers in villages. The very subsistence of farmers is in danger because they must switch over to new crops for foodgrains have a limited outlet. Subsidies are vanishing for them while their European counterparts continue to enjoy them.

India is today divided between those who support economic reforms as dogmatically as those who had rooted for the socialistic paradigm for India when it started its journey towards economic development.

The ones who are guiding the government’s economic decisions from inside or outside — mostly former World Bank and IMF employees — have one-track minds. They think that they are doing the best for the country when the gains of economic reforms have not percolated to only 10 to 15 per cent of the population. But they continue to cite examples from the West.

What has happened in the past in the industrially advanced countries has little bearing on us now. As a matter of fact, the countries that are advanced today were economically better off than India, in terms of per capita income, before their industrialisation began. Western economics, therefore, have little relevance to our present day problems.

The same goes for Marxist economics, which are in many ways out of date, even though they throw considerable light on economic processes. We thus have to do our own thinking, profiting by the example of others but essentially trying to find a path that will suit our conditions.

What needs to be remembered is that it is not by some magic adoption of socialist or capitalist method that poverty suddenly leads to riches. The only way is through hard work, by increasing the productivity of the nation and organising an equitable distribution of its products. This is a lengthy and difficult process. But it is the only one.