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ShareThese private banks did not object to the government's right to interfere once it put in the money. They found a way out by returning the governmental aid. This should serve as a fairly good example of what relations between the state and the private sector should be: keep away from each other as far as possible unless a crisis forces no option but to come together. The market meltdown was one such crisis. It has created an embarrassing situation, and a private sector player with a sense of self-respect would want to get out of it as soon as possible.
In India, the demarcation between state and private sector is blurred. Worse, there is an unholy alliance between the two. In terms of public posturing, the private sector icons display ideological hostility towards the state and the state socialists, especially among politicians, reciprocate heartily. But in practice they work closely usually surreptitiously. And that is a vicious alliance. Not many remember that Ronald Reagan raged against both big government and big business. He saw both as enemies of the freedom of the individual.
The Indian state, even through its ostensibly socialist phase, has always been friendly to the private sector, a fact that is often overlooked by the ideological enthusiasts of the market economy. The bonhomie comes to the fore in the run up to the Union Budget every year. The private sector presents its wish-list without any sense of embarrassment. At the same time, captains of industry speak like politicians when they swear by inclusive growth and the need for greater governmental spending on health, education and other social sector segments.
There is need for a clear separation of spheres between the two. Whether it is in the matter of spectrum allocation in the telecom sector or the open sky policy in civil aviation, the big players and the decision-makers in the government do not seem to be sufficiently far apart. This raises legitimate concerns about the whole process of economic liberalisation.
The righteous critics of a nosy state are not as clear and loud in their criticism of a private sector which takes all help from a governmental set-up. Even during an economic downturn, a private sector that insistently knocks at government's door should not pass off as a legitimate suitor. Those who are unsparingly critics of the record of Air India have to maintain the same critical standards with regard to the failure of an IT major like Satyam. If intelligent governmental intervention in Satyam is justified, then it is in the case of Air India as well.
India needs a vibrant private sector which stands fiercely independent with regard to the state. The market economy needs its profits but it also needs a sense of values, especially a strong sense of its own self-worth. People are quite disappointed and angry with an unresponsive state. They look to a private sector which is different and better than the state. The private sector is failing the test.
People are losing their faith in the private sector as well. They feel that they are caught between the devil (government) and the deep sea (private sector). The crisis of confidence is deep. Politicians and bureaucrats on the one hand, and captains of industry and business leaders on the other, have to do something to restore faith in the system. A beginning can be made if the two stand apart, as independent players if not as adversaries.
