The Hindu Business Line : `Cong for privatisation on case-to-case basis'

The Left does not have a monopoly over social conscience, and they cannot be moralistic that it is only they who are worried about the common man. This attitude is as dangerous as the Sangh Parivar's claim of having monopoly over nationalism.

New Delhi , May 14

ARTICULATE Congressman Mr Jairam Ramesh is widely seen as the person who will play a key role in the economic policy formulation of the new Congress-led Government at the Centre. The 50-year-old IIT engineer-turned-public policy expert-turned-political spin doctor tells Business Line what the new dispensation's economic thrust will be.

So, are we going to see a Centre-Left Government in power in the next few days?

Yes, it would be a Centre-Left Government, in which the Left would play an important role. It will be something like the 18-month United Front Government of 1996-97, which was also Centre-Left.

You mean, socially left but economically right.

That's an unfair way of looking at things. It is wrong to describe a person such as Dr Manmohan Singh as being economically right. The Left does not have a monopoly over social conscience, and they cannot be moralistic that it is only they who are worried about the common man. This attitude is as dangerous as the Sangh Parivar's claim of having monopoly over nationalism. We must avoid ideological posturing, and one should not really see any fundamental conflict between Mr Buddhadeb Bhattacharjee and Mr Manmohan Singh. The Congress and its allies and the Left parties will soon work out a Common Minimum Programme (CMP), which would actually be a Common Maximum Performance document. The same people who drafted the CMP-1 of the UF Government — Mr Sitaram Yechury, Mr Jaipal Reddy and myself — will be part of the CMP-2 drafting exercise of the Congress-Left Government as well.

But the markets don't seem particularly impressed. The talk about going back on privatisation and closing down the Disinvestment Ministry led to a lot of panic selling on Friday...

Well, one should not take these short-term gyrations seriously. The markets are always prone to extreme swings, from irrational exuberance to unwanted pessimism. Once the Government is in place, the uncertainty will end and things will get sorted out. After all, the new dispensation will comprise the likes of Dr Manmohan Singh, Mr P. Chidambaram and Mr Pranab Mukherjee, who have all been Finance Ministers of high public standing. But yes, if one is to run a Government, there should be an element of public reticence and discipline. Individuals should, in particular, observe Brahmacharya when it comes to giving public statements.

But what exactly is the new Government's stance going to be on privatisation?

Certainly, it will not be the Arun Shourie brand of privatisation, which was totally ideological. We would favour the G.V. Ramakrishna approach which would look at individual PSUs on a case-to-case basis. I, for one, opposed the privatisation of IOC and ONGC on strategic grounds, just as the move to privatise IPCL and VSNL was wrong since they have ended up creating private monopolies and decreasing competition.

During the UF Government's tenure, there were nine PSUs — ONGC, NTPC, HPCL, BPCL, IOC, Gail, BHEL, SAIL and VSNL — identified as Navaratnas, in which government stake would not fall below 51 per cent. Instead, the idea was to make them global giants while retaining them in the public-sector fold. But on the whole, one has to accept that, unlike China, the political economy here does not allow PSUs to operate on truly commercial lines and free from bureaucratic and political interference. We favour a practical and non-ideological approach to privatisation. A good example is the Karnataka Government's stance to privatise distribution of power but continuing to keep generation and transmission in the public sector.

We also feel that the policy of SC/ST reservation should continue for at least 10 years after an entity has been privatised.

Some of the newly elected MPs from your party, such as Mr Ajay Maken, have promised to constitute a Sixth Pay Commission for Central government employees while also criticising rationalisation of interest rates on Provident Funds and small savings schemes. How are you going to deal with these demands?

On interest rates, one must admit that the present levels are rather low. If one follows Dr C. Rangarajan's classic monetarist approach, the average real rate of interest should be close to the real GDP growth. Taking the present average real GDP growth of 6 per cent and inflation of 5 per cent, nominal interest rates should be around 11 per cent, whereas banks today are offering depositors hardly 5 per cent, which means negative real interest rates. The BJP Government's aggressive lowering of interest rates has, no doubt, led to a surge in housing loans and mortgage finance, thereby boosting consumer expenditure. But it has not translated into increased investment demand while simultaneously affecting the interests of savers and pensioners. I would favour an approach that is mid-way between the Kelkar-Jalan school of aggressive lowering and Dr Rangarajan's monetarist position.

As far as the question of the Sixth Pay Commission goes, we have to be realistic. Our focus should be on the unorganised sector, which accounts for 93 per cent of the country's workforce. Everybody knows the damage that the Fifth Pay Commission Award caused on the finances of state governments.

What are the policies of the previous Government that you would continue with or fine-tune?

We are certainly committed to achieving zero-revenue deficit by 2008 as underlined in the Fiscal Responsibility Act.

We also favour the complete implementation of the Kelkar Committee Reports on Taxation, along with putting in place a nation-wide Value Added Tax (VAT) regime in six months.

But along with these, we plan the immediate enactment of a National Employment Guarantee Act on the lines of Maharashtra's EGS scheme that provides a legal guarantee for at least 100 days of minimum wage employment on public works programmes every year for all rural households.

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