Out-resource

Public ownership is generally the kiss of death for a corporate enterprise. But,time after time,in lists of the largest and most profitable multinationals,some state-owned companies figure: because they extract,refine,or burn natural resources. Sinopec,from communist China. Gazprom,from Putins Russia. And an entire rogues gallery of dodgy companies from countries with distinctly dodgy governments companies that have prospered through state backing,through foreign ministries that havent hesitated to intervene to strong-arm concessions for their utilities overseas operations.

Now the Prime Ministers Office reportedly wants to add India to that list of dodginess. This isnt to say that state-owned Indian companies should be somehow prevented from expanding: several have made important acquisitions abroad. Just last week it was reported that the National Mineral Development Corporation packed up an important Australian source of iron ore. And the PMO will say that all they wish for is a loosening of the regulations on the hiring of technical consultants abroad,and that Indias resource security is at stake.

These arent bad arguments,as far as they go. But theyre so short-sighted that they dont go very far. Remember,India has a reputation in resource-rich but capital-poor parts of the world for not being an arm-twisting and extractive,but a cautious and supportive,trading partner. Will jeopardising that aid Indias security? And theres another problem. Expansionist resource PSUs come to depend on state support and are,indeed,hamstrung without it,since they arent efficient at exploration and discovery. Pushing Indias resource companies into quick-and-dirty overseas purchases will lock us into dependence: our energy and mineral supplies will depend too strongly on our foreign policy. Not to mention on state-owned companies staying state-owned. That is the most short-sighted step of all: true energy security will come only through comprehensive reform.