Some food for thought
"I may neither choose who I would, nor refuse who I
dislike; so is the will of a living daughter curbed by the will of a dead
father."
—William Shakespeare (English writer 1564-1616)
Word for the day
Ideogram (n)
A written symbol that represents an idea or object directly
rather than a particular word or speech sound, as a Chinese character.
First thought this morning
I chanced upon a twitter handle @theworldindex. It has some very
interesting data about various countries in the world. Though there is no way
to authenticate the data, but intuitively I can say it does not sound too off the
mark in many cases. The following is some data I found interesting to note and
actionable for the government.
Chart of the day
Use PSE for public good
There are hundreds of not for profit organizations that have
been set by government in post independence period. These organizations are
funded and managed by the state. Most of these organizations have done
commendable work in the area of poverty alleviation, equality, inclusion,
social justice, research & development, health, education, science &
technology, business development, regional development etc.
Similarly, there are hundreds of commercial public sector
undertakings owned and managed by the central or state governments. The primary
objective of establishing these commercial undertakings in public sectors was
to kick start the industrialization in the independent Indian state, since the
British left behind an abysmal industrial infrastructure, poor private
enterprise and dearth of capital. Government started with investing majorly in
infrastructure and core industries like steel, power, oil & gas, cement,
heavy engineering, railways, road transport, shipping, civil aviation, telecom,
insurance, banking etc. Substantial investment was also made in strategically
important defence equipment manufacturing and allied services. Later coal and
many private banks were also nationalized. In due course the government made
material investment in food supply chain (fertlizers, sugar, food
distribution), consumer products, retail & wholesale trade, to achieve
price stability, better availability, equitable distribution etc.
As the objectives were gradually met, in early 1990s an
in-principle decision was taken to divest the stake in non-strategic
undertakings in public sector. The process was begun with disinvestment in some
loss making non-strategic undertakings. VSNL, CMC, Maruti, BALCO, IPCL,
Hindustan Zinc, etc were sold to private sector. Stake in many profitable
undertakings were diluted through public offerings and strategic sales, e.g.,
banks, insurance companies, MTNL, energy companies, etc.
Besides, the monopolies of the government in sectors like roads,
power, telecom, oil & gas, civil aviation, ports, defence manufacturing
etc. have been diluted to allow larger private participation (both domestic and
international). The private sector has built adequate capacities in sectors
like civil aviation, telecom, roads, power etc. to leave the role of government
redundant. Most government enterprise in sectors, where free private
competition is allowed, struggle to stay profitable because of their inefficient
organizational structure and tedious decision making processes. There is no
point letting these enterprises continue in operation, especially when the very
objective of their existence has already been achieved. MTNL, BSNL, Air India,
NALCO, STC, MMTC, SAIL, NBCC, NCL, RINL, Pawan Hans, SJVN, TCIL, Hindustan
Paper, Hindustan Copper, Bharat Pumps, BHEL etc. are some of the examples.
In my view, it is high time that the government must constitute
a High Power Council (on the lines of GST Council) comprising of
representatives from all stakeholders (Political parties, state governments,
employees unions etc.) to study and recommend a total overhaul of public sector
enterprises in central, state and joint sectors. The Council may recommend
sale, dilution, closure, asset sale, and/or change in objectives of these
enterprises.
I would like to offer following suggestions in this regard:
(1) The farm sector
in India needs massive investment in technology, R&D, land reforms,
training and reorganization. In that sense the situation of farm sector is very
much similar to what the situation of industrialization was at the time of
independence. Private capital is available but not willing to flow in farm
sector due to a variety of regulatory and practical constraints. The government
should kick the process of investment in farm sector. The government should
acquire all farm holdings below the viable size and consolidate these into
large sized farms. The respective land owners and/or and landless farmers
tilling the acquired land should be employed at minimum wages plus a share in
profit. The money for this venture may be raised by selling most of the
industrial undertakings in the public sector, as their purpose of being in
public sector has already been served.
For the larger farm holdings, the government should encourage
the farmers to partner with the food processing industry on cooperative model.
The factories must be taken to farms.
(2) Companies like
MTNL, BSNL, Air India, STC, MMTC etc should be converted into social
organizations.
(i) MTNL and BSNL
may be merged. The work force may be rationalized or adopted in other
government departments where vacancies are lying for years.
The merged entity may be mandated to provide cheap 5G data to
MSME, Educational institute, tech startups in metros; and connect all villages
to national digital highway. All educational institutions (primary schools to
IITs/IIMs) may be connected digitally and Right to Uniform Education may be
implemented through this digital platform.
(ii) Air India may
exclusively be used as feeder to the private airlines. It may bring people from
smaller and far away destinations to the major hubs for onward journeys. It may
be used as air ambulance service for ferrying critical patients to the major
cities. It may also be used as a cheaper cargo service dedicated for Indian
ecommerce ventures. A small cess of Rs50 per domestic air passenger can
contribute Rs85-100billion for Air India's social programs.
(iii) STC and MMTC
have tremendous experience of operating in foreign countries. Their expertise
could be used for a variety of purposes. For example, they can be sourcing and
C&F agents for Indian trading startups. They can also work as foreign
placement agencies for Indian workers. They can operate foreign tours for
Indian travelling overseas, to save them from being cheated by unscrupulous
travel agents.
(3) The government
must consider limiting the number of public sector banks to just 5, one for
each region. All other banks may sold and proceeds may be used to build two
large development financial institutions, one for funding large infrastructure
projects and the other for funding technology innovations.
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