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G. Srinivasan

In this crucial second half of the fiscal, with Assembly elections round the corner and a comfortable enough macro-economic situation, the Government should shed its obsessive concern with disinvestment and the 8 per cent economic growth target and turn, instead, to competing demands for development, including poverty reduction programmes, says G. Srinivasan.

WITH the economy into the crucial second half of the fiscal, which will also see the Assembly elections in five States — including such major ones as Rajasthan, Madhya Pradesh and Delhi — the elbow-room for the ruling dispensation at the Centre as regards autonomous policy initiatives is largely contingent on the outcome of the electoral battles.

No doubt, the macro-economic scenario is comfortable enough in terms of revival of industrial activity, good agricultural crop prospects, hefty foreign exchange reserves, low inflation rate and overall economic growth projections set to surpass the post-reform high of 7.8 per cent recorded in 1996-97.

Even the usually understated Finance Minister, Mr Jaswant Singh, could not resist talking, to a few hand-picked financial dailies, about the achievements of the economy under his stewardship.

Both the Prime Minister, Mr Atal Bihari Vajpayee, and the External Affairs Minister, Mr Yashwant Sinha, later spoke to the larger audience of the India-Asean Business Summit in Bali (Indonesia) about resurgent India, in general, and its economy, in particular, so that investor perception about India could turn favourable.

Even as the feel-good factors permeate the atmosphere, as they do after the monsoon and with the start of the festive season and stretching till the onset of winter, the rumblings within the ruling circle were also loud and clear over certain important matters.

These include such sensitive issues as a unified licensing regime for the telecom sector and the ruling by the Supreme Court last month on obtaining Parliament's imprimatur for the sale of HPCL/BPCL.

No doubt, those ministers who were vehemently opposed to sale in a strategic sector such as oil were happy that the disinvestment process had been derailed. But their happiness was short-lived as the indefatigable Disinvestment Minister, Mr Arun Shourie, tried to overcome the opposition by proposing to split the IOC's operations into refining and retail outlets and put the latter up for sale.

While criticism of this proposal has been spontaneous, as IOC is the only Indian Fortune 500 company and has an integrated network of refining and marketing outlets for its products, the resistance from the IOC employeesto this move is strident.

It is noteworthy that the Supreme Court ruling in the sale of HPCL/BPCL directed the Government to get parliamentary nod for the disinvestment in PSUs created through parliamentary legislation.

There are several PSUs both at the Central and State levels, that have been set up by legislative fiat, and getting approval of the legislature in each and every case is sure to make disinvestment a more convoluted process.

If the apex court ruling on disinvestment is interpreted as a setback to the Government's ambitious agenda on this score, the growing resistance of the employees of units to be divested, including IOC and STC, poses another obstacle.

The employees' opposition is understandable as the new owner might have a different approach to managing the affairs of the company that might be at odds with the culture of the public sector, to which they have been accustomed over long years.

This does not in any way detract from the contribution of employees to successful PSUs, be it in the oil sector, or in telecommunications.

Earnest employees with serious dedication to the companies they have been associated with can be found in all public sector companies and, in the absence of an assured future for their wholesome growth under the new dispensation, such employees cannot but be apprehensive about the sell-offs proposed.

Moreover, the Government's attempts to create the National Renewal Fund (NRF) to redeploy and retrain employees had not been such a roaring success. PSU employees cannot thus bank on it totally to help get them an alternative vocation.

What is also missed is that the amount of compensation or severance payment that is dangled for employees in an about-to-be-disinvested company is too meagre to make any worthwhile difference to the employees who voluntarily opt out.

The package should not be so designed as to treat on a par an employee with a few years of service left and one who has a decade or thereabouts to go for retirement, especially when the latter has not developed any other skill or avenues open to him/her in the job market.

The Government has failed to create a separate Disinvestment Fund to address the deep-seated concerns and fears of employees whose company is lined up for sale.

It is also an unfortunate reality that the proceeds of earlier disinvestments have gone, as the proceeds from the sales now proposed will also go, only to the Consolidated Fund of India and are used as a gap-filling source of revenue to the exchequer.

The funds are not used for any other lofty cause, such as tackling the basic concerns of employees or retiring the high-cost debt of PSUs and restructuring them to ensure their viability.

The general backlash against the policy of deregulation and liberalisation the world over stemmed essentially from, as UNCTAD's latest Trade and Development Report said, "the loss of policy autonomy at both micro-economic and macro-economic levels and the narrowing of the room for policy manoeuvre".

Even as successive Governments since economic reforms were launched in India in the early 1990s gloated over their record of reforms with a human face, the reality is far removed from this claim, the result of which is manifest in the subtle and now open opposition to reforms such as the disinvestment of PSUs from the very stakeholders, including the employees.

In US, the citadel of capitalism, the Republican President, Mr George Bush, is being scathingly attacked for encouraging "jobless growth" whereas for all the talk of promoting "growth with social justice", the ill-effects of liberalisation and privatisation on those who eke out their existence in a small job — be it in factory or in an office — are increasingly ignored in India.

It is one thing to execute strategies with conviction, but entirely another to safeguard the likely victims of such strategies if they do not provide the requisite support to affected sections of society.

The apex court, which has been playing a proactive role on issues of immense importance to citizens, has in the BPCL/HPCL ruling told the country that it will not entertain anti-disinvestment petitions unless there are specific provisions in the law.

Even as the executive and judiciary play their respective roles with great responsibility, it behoves the Government to act with concern for the policies it formulates and the wider results such policies would have on various segments of the population, to prevent any backlash later.

Leave aside disinvestment, the Government should shed its obsessive concern with high economic growth of 8 per cent per annum at a time when competing demands for development, including poverty reduction programmes, need to be bolstered through launch of the Antyodaya type of food-for-work programmes and other public investment projects, providing gainful employment to millions of people living on the margins of society.

India's aspiration to become an OECD member in the medium term will not move an inch if economic management is conducted in a business-as-usual fashion. The Finance Minister, Mr Jaswant Singh, with the eight of his wisdom and practical experience, must perforce devise some innovative strategies and not merely content himself with borrowed prescriptions.

No doubt, these solutions are touted to be one-size-fits-all but in reality they leave a lot to be desired in terms of causing social dislocation and engendering heightened dissatisfaction across a cross-section of the people.

Using the time now and before the general elections sometime before the end of next year, a radical shift in development strategies is urgently called for that make ample use of the cornucopia of foodgrains and foreign exchange reserves before they became blighted for want of proper use.

The BJP, which prides itself often on being a party with a difference, should take time by forelock instead of persisting with policies such as disinvestment of PSUs, which can be conveniently put on the backburner for the time being.

Both the micro and macro management of the economy and unleashing of growth impulses demand a different model of economic policies, free from the constraints of both excessive State intervention or absolute freedom to market forces, so that the people would be supportive of the governing class at the hustings.

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