Nov 2003 Edition

Privatization as Policy

Does it serve the interests of the Nation?

Ever since the collapse of the Soviet Union, privatization has been peddled by all manner of vested interests as the ultimate solution to the problems that ail most developing nations. Aggressive right-wing ideologues have successfully tapped into public dissatisfaction with the functioning of poorly managed public sector companies (particularly those that provide essential services), and attempted to use this discontent to posit privatization as the only solution that will ameliorate the concerns of the public.

A frustrated and generally poorly educated public has sometimes initially gone along with such an agenda. Amongst the most aggressive in pushing the agenda of privatization have been a variety of industrial and commercial interests in the nations who became rich as a result of the colonial loot that they were able to extract in the previous centuries. Countries such as the US and Britain (where the infrastructure is generally well-developed) have been unable to provide sufficient new business opportunities to their infrastructure providers. These industrial and service companies are now looking to expand outside their borders, and the privatization of utilities and other essential services in large nations such as India provide lucrative opportunities for expansion.

At the same time, banking and financial companies are also seeking higher profits by buying stakes in strategic and potentially highly profitable sectors of the Indian economy. It is little wonder that the governments of the richest nations, and also international lending agencies such as the IMF and the World Bank, and rating companies such as Moody's and S&P have been actively pressurizing the Indian government (and governments throughout the world) to accelerate the program of privatization, and to change the nation's laws so that these privatized companies can then easily repatriate their profits to share-holders outside India.

Governments that attempted to resist such an agenda - (such as in Yugoslavia and Iraq) were eliminated through a relentless campaign of sanctions and war. Slobodan Milosevic of Yugoslavia and Saddam Hussein of Iraq were both subject to a highly-manipulative and mean-spirited campaign of character-assassination in the world media. Even as Slobodan Milosevic won a popular democratic election in Yugoslavia, he was repeatedly branded a "dictator". All manner of manufactured charges were brought against him to make it appear that he was hostile to Muslims in Kosovo whereas throughout his political career he had shown a broad commitment to secular values.

In Iraq, while it was true that the Baath Party under Saddam Hussein did not offer anything akin to Western democracy, it must be noted that few in Iraq were actually demanding Western-style democracy. The Baath Party - by nationalizing Iraq's oil industry, and by its program of scientific modernization, mass education, and improved rights for women, had won a certain measure of acceptance, even a loyal and passionate following amongst sizeable sections of the Iraqi population - who saw in the Baath Party, the best expression of secular Iraqi nationalism available to them at the time. Certainly Britain, Iraq's former colonial master had little moral right in trying to bring "democracy" to the Iraqi people, and it is little wonder that the US-British occupation of Iraq is being met by a fierce guerilla war.

Of course, as is now quite evident, the stated reasons for bombing Iraq were not the real reasons for the war. The real reason was to eliminate an Iraqi regime that refused to permit the reckless privatization of Iraqi assets. The war in Iraq was clearly about grabbing Iraq's most vital resources - supposedly under the cover of "eliminating a hated dictator". While it is not certain that this barbaric colonial venture will succeed in Iraq, privatization as a means to extort super-profits from populous developing nations (such as India) remains very much on the agenda of the world's leading imperial powers.

Unfortunately for the people of India, it is not the US and Britain - who are alone in pushing such an agenda. The Japanese have also been agitating for greater privatization of the Indian economy, and so have the EU nations (although they have been the least strident on this issue). But most significantly, it has been the Indian chambers of commerce - such as FICCI, and Indian industrialists - such as CII (Confederation of Indian Industry) who have also been demanding that the government accelerate the program of privatization - not of loss-making, unimportant companies - but of highly strategic and profitable companies such as India's largest and most successful energy companies. No one could better serve the interests of this privatization lobby than the BJP's Arun Shourie (a representative of the extreme right) - who clearly has the ear of the Prime Minister, the Deputy Prime Minister and the Finance Minister.

Even as the BJP campaigned against the privatization of strategic and profitable Public Sector Companies when out of office, the BJP leadership is now trying every trick in the book to sell off some of India's best Public Sector companies on the cheap. So much so that its latest move to break up Indian Oil and privatize large chunks of it was criticized by no less than the neo-liberal champion and the former darling of Western businesses - P. Chidambaram.

That there are Indian businesses salivating at the prospect of getting hold of India's most prized public sector assets on the cheap is not surprising - but it must be asked - are such moves in the Indian public interest?

It is undoubtedly true that many in India would like to see aggressive reforms in the Indian Public sector - they would like to see more scientific and technological modernization of the Public Sector - they would like to see corrupt and tardy employees suitably disciplined and punished much more harshly when found guilty of repeatedly abusing the public trust. They would like to see both management and unions in the Public Sector take an active role in preventing the loot of the Public Sector. They would like to see greater independent oversight of the Public Sector through active watchdog organizations, and better laws to encourage whistle-blowers to come forward and expose corruption in poorly managed Public Sector companies. They would like to see and end to the cronyism, nepotism and parasitism that plagues the Public Sector - especially in the Railways, Public Works Departments and Public Utilities. They would also like to see more technically competent and motivated professionals managing Public Sector companies - rather than the tired or opportunistic bureaucrats who never seem to take any responsibility for the inefficiencies that plague their departments.

There is a host of reforms that could be instituted to fix the most serious of the problems in the Indian Public Sector. And with few exceptions - that is also what most Indian voters would like to see happen. The demand for privatization is actively endorsed only by a very small percentage of Indians - mainly the English-speaking urban elite that is not only very annoyed with the poor performance of certain public-sector utilities - but is also disdainful of the public sector in general. Unbothered by the needs and concerns of the masses, they are generally less worried by the higher prices that may follow privatization. They are also less concerned if vital Indian assets are taken over by foreign companies - partly because of indoctrination by the Western (and English-language Indian) media, and partly because they expect lucrative jobs in such companies.

But for the vast majority of India's poor and salaried masses who don't speak English - privatization is hardly the solution they would wish to embrace. Instead, they would like to see greater state intervention - so that there is more balanced development. In the neo-liberal regime - states like Jharkhand, Bihar, Orissa and Assam have been almost completely starved of new investment. Small towns throughout India - especially in Eastern Uttar Pradesh and Eastern Madhya Pradesh have also been left in the lurch. A quarter of the Indian population remains mired in deep poverty with little to hope for from the agenda of privatization.

In the rural areas, the condition of primary and middle schools is appalling, as is the transport and other infrastructure. Even in the cities, lack of power, clean air and water remain very serious problems. The agenda of privatization has also done precious little in reducing India's dependency on imported fuels. The need of the hour is to pro-actively fund research into alternative fuel technologies and energy efficiency. Not only is India an extremely energy-poor nation - it is also extremely wasteful in its use of energy. This is an area that is crying for greater state-intervention, but to date all that the government has to show are a few half-measures.

An enlightened state could easily mandate more efficient use of agricultural pumps, the use of solar power panels in public buildings and larger private dwellings, and insist upon the use of energy-saving and water-harvesting schemes. Much more could be done to speed up the widespread introduction of bio-fuels, and increase the use of wind power. But instead, it has been left to cash-strapped state and local governments to take the initiative. Even as the Indian courts have been occasionally helpful in this regard, most politicians have preferred to side with private lobbies who have refused to put the concerns of the nation above petty profits. Thus, even as many dedicated activists have fought valiantly for clean air and clean water, for better energy management and conservation, improvements have been very slow in coming.

The Indian public has never voted for privatization, or for the irresponsible retreat of the state. They expect the state to play a pro-active role in solving the most pressing problems of the Indian people. But what they have yet to realize is that even as India's major political parties make tall promises in the run-up to elections, they invariably act in ways to please Indian or foreign business interests. Until the Indian people find a way to circumvent the power of these all-powerful commercial lobbies (and their agents in the Westernized upper middle class), the Indian people will find the exercise of their democratic rights to be a more and more fruitless and disappointing act.

Throughout the world, there is increasing turmoil in this regard. In South America, intense public pressure has displaced entrenched political elites who have tried to push a neo-liberal agenda too aggressively - in Venezuela, Ecuador, Argentina, Brazil and now Bolivia. Closer to home, Nepal's constitutional monarch is facing growing opposition.

In India too, broad sections of India's less affluent masses are becoming increasingly disenchanted with government policies. If India's business and political elites remain willfully oblivious of their concerns, (and continue to peddle the false mantra of privatization as a substitute for enlightened government action), they will have no one to blame but themselves if the growing anger and frustration seeks unexpected or more militant and radical outlets.

Related Links:

Problems of Indian Agriculture

Unrestricted globalization - boon or hazard?

A Possible Answer to Global Oil Dependency

Economic Growth and Social Well-Being

The Private Sector's Contribution to Higher Education and Research

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