In India, everyone wants to talk about privatisation. It is a hot topic. Everyone has their views on it. Some people say that Government is selling the country. While some say that with privatisation the efficiency will increase. Who is right? Who is wrong? Can we understand both perspectives?
Here I will try to do that in this blog.
We will understand why the government is behind privatisation? How was the government functioning for so long? And how is the future looking ahead?
Two perspectives are clear,
In layman's language, we can understand left and right perspectives.
The left perspective (socialism) says that the economy should be pro-poor. All policies should be in the poor's favour. The government's money should be distributed to the poor. Everyone should have right over the country's treasure. Slowly this road goes to communalism. In this perspective, it is believed that everything will be state-owned. The government will run everything and it should have entire control.
The other perspective is right-wing
Which is believed to be a capitalistic viewpoint. It is said that the government should have minimal interference in the businesses. Government should not be running any business and should not interfere with those who are running the businesses. It should be like a referee who should make and govern the laws but you won't see any kind of subsidy given
These are the two viewpoints;
If you see purely these both are IMPOSSIBLE! and they are not followed purely in any country. Some countries have achieved about 80-90% but achieving it 100% can have huge drawbacks. From a capitalistic viewpoint there becomes a massive gap between the rich and the poor, there will be class divided and many more problems that can occur.
Similarly, if we see the socialistic viewpoint that takes us slowly to communalism. It has its drawbacks like the economy can crash Or you can unknowingly create some dictator. Many kinds of complications can come that's why governments mostly select the MIDDLE ROAD! Just like many other countries have selected now if we talk about India, we don't have to go way back. Since we are talking about the economy let's go to east India company. The name itself tells that this was a company that was very oppressive and wanted to expand across the world when it reached India it used its expansionist policies. It was a capitalistic model they didn't care about anyone they just saw their profit and they minted as much as they could. When the talks of defeating the company brewed the people in front of it would use socialism. They will say that all this is wrong and when we will make policies we will make them socialistic.
That happened exactly when Nehru became the PM he used his socialistic policies. He started subsidies because the country had a huge population that needed support. When Indira Gandhi became the PM she used even more hard left turns. She said everything should be nationalised, All the companies should come under the government. Many companies got nationalised during this time Air India was nationalised in 1953. It was followed by more nationalisation in more sectors anyways these policies failed to sustain the country for a long time. It was visible government cannot distribute if it doesn't create wealth. This gave momentum to the thoughts of taking a right turn to try and see what can be achieved using the capitalistic model. It slowly gave wind to the idea of opening up the Indian markets creating a business-centric environment and experimenting to see what results in it gives. It gave many results and one of them was that many opportunities were created in India and also many jobs were created.
Markets were opened in 1991. It was said that India is economically liberalised foreign businesses can now invest in India slowly an environment was created in India that promoted private companies. In the years between 2003 to 2007, how did low-cost carriers increase? Many Airline companies were established such addition was in many other sectors, that supported the private businesses. This gave rise to the question of whether to privatise such poorly performing government-run assets Such efforts also started in this period. I told you earlier that the idea to privatise air India started in the year 2000 Which could finally be privatised now Many other companies were discussed to be privatised then Which are still being discussed this list mostly contains such companies who are not making big profits for the government and are now becoming a burden to the government. Whether these companies should be privatised or not? should be understood carefully.
I told you about left and right ideologies. Now understand their drawbacks. I take a hardcore left turn and say that everything should be government-controlled businesses should be government-run, it should be making everything from a needle to sword and then distribute the money, give subsidy plus take care of the poor. It creates some problems first one as I said earlier
1. How to distribute wealth if they don't create it
2. Government doesn't have any skin in the game
3. There are no incentives to take the business ahead
or show profits or to be answerable to the investors
4. The work culture is poor
5. We don't have the expertise, can hire IAS officers and many government employees but they don't have knowledge of every field So how will they run businesses that's why you will see most of the government businesses go in losses Plus the government changes in every 5 years Policies change, direction change, vote bank share changes So even if any business work, whole direction changes after 5 years. The boat sails in the east, then after 5 years again it sails to the west Caught in this east and west business hangs in between like a pendulum. These businesses even know that it is government-run. Even if it goes in losses, the government will save us So there is no fear Businessman has fear of competition. He has to run at speed, show profits to get money from investors. That driving force is missing here, Secondly, if you take a right turn and give more power to the private sector it has its problems.
First is the creation of a monopoly, You can say that economy is open and anyone can invest, open business
But what if all those businesses are going under the same company? What if the same businessman is acquiring them all? In the end, he will be the sole business owner, who can set rates according to his wish and can sway markets at his will. Monopoly situation becomes too big to handle Secondly a private company is behind profits. It does not care so much about other people, it doesn't have to take care of people. It can set the policy to gain maximum profits but the government cannot do this. Government has to take of people if they privatize everything then, it can create profit-making machinery but to take care of people is not enough. Plus if you make everything privatized as wished by the government to shed the business responsibility. Then the companies that are functioning good will have to take the hit. Also if you privatise there will be foreign investment its possible a foreign country might buy an important Indian company which would give it the power to disturb India sitting at home many Indian companies have investments from China. How China controls them, their data and in turn control Indian markets through investments is news of the future. Right now we don't know everything about it both models has their benefits and drawbacks, both models are not entirely good.
The question is how much we should mix them
Which things should be privatised? Which things should be government-operated? I think all the things that are luxury or that need more efficiency should be privatised. This gives accountability, improved quality and increased efficiency mean anything that is being slowly manufactured in India and can be rapidly manufactured should be privatised. Travelling routes where you think the journey is slow. Where people are paying full money but are still facing troubles should be privatised now I don't say privatise 100% In railways government should run it like they are doing already But also give entry to private players People who can afford, are in rush, and the ones who want to avail full services of the money they spent should have an option And when you start this your government-run companies will have more responsibility
Then the question will be asked as to why your trains are late if the same trains can timely finish their journeys on the same tracks? They will feel pressurised and have competition Competitive environment can improve things. This is the basic idea, basic thought, and hope Whenever you hear privatisation word not just in India but also outside.
I hope you get the point. I will be back with such interesting concepts.
Till then take care
Happy Learning!
Comments
Post a Comment