Comment

It is convenient to think of India’s Left as champions of the public sector. In this article, one would like to suggest that they are its worst enemies.

In the last few years, the Left has assiduously destroyed public wealth, either by design or by ignorance, and jeopardised the public sector’s ability to generate enough resources to feed the poor.

Nowhere is this more evident than in the Pavlovian responses of the Left to ideas about selling public sector shares back to the public. Earlier this week, Bharat Sanchar Nigam Ltd (BSNL)proposed a 10% stake divestment by the government to raise $10 billion. That’s enough to run the entire anti-poverty schemes of the government for a year. Prompt came the response from the CPI(M). No divestment.

Reason: the BSNL already has a Rs4,000 croresurplus and doesn’t need the money.

One wonders which world the Left lives in. Here is a simple proposal to raise money for the public exchequer almost out of thin air, and the Left says no. I can’t think of a more moronic response.

At $10 billion for a 10 per cent stake, the BSNL would be valued at nearly $100 billion. That’s Rs 400,000 crore — in just one company. It’s almost equal to the centre’s budgeted net tax revenues in 2007-08.

But the damage runs deeper. The real problem is not that the Left vetoes disinvestment. By doing so, it is actually destroying the public sector, a little bit at a time.

Now consider what really happens when you don’t allow a BSNL to go public. The company gets little money to invest. Ten years ago, it was the biggest telephone operator in the country.

But when landlines stopped growing, and mobiles became the medium for
increasing tele-density, BSNL was quickly overtaken by private sector rivals. Every time BSNL tries to increase its mobile clout, its private sector rivals quietly bribe bureaucrats to scuttle its plans by some device or the other.

Someone will allege corruption in the BSNL tendering process; another guy will want the orders to go to the public sector ITI. Net result: BSNL stagnates while its rivals gain strength.

The Left is at the forefront of thiseffort to decapitate the public sector by refusing to free them from bureaucratic and political control.

Thus, even asprivate sector companies are rising strongly to conquer the world, the
public sector is stuck in the quicksand of political meddling.

One wouldn’t be surprised if Left opposition to disinvestment is entirely financed and
supported by private sector buccaneers.

A public sector in bureaucratic control is exactly what the private sector needs to keep competition at bay.

In sector after sector, this is precisely what is happening. The Left will not
allow banks to be privatised. Or telecom companies. Or oil companies. Every
diamond in the public sector has thus been reduced to charcoal.

The Left,aided ably by Mani Shankar Aiyar, the previous petroleum minister, forced the government to keep the lid on petro-products prices. Today, with crude oil quoting at $90-100 a barrel, all Navratna oil companies are basket cases, kept afloat only by government handouts.

The losses on their balance-sheets — beforebeing blotted out by the issue of
compensatory bonds — add up to tens of thousands of crores.

So much for the Left defending the public sector. A byproduct: as the public sector stays weak, the private sector goes from strength to strength.

The Reliances, Airtels, Vodafones, ICICIs and HDFCs can rest easy that the Left is working hard to keep all their public sectorcompetitors tied up in red tape and
political corruption.

The list of public sector companies that the Left has managed to eviscerate is impressive: Indian Oil, BPCL and HPCL in the oil sector; MTNL in the telecom sector; and most public sector banks.

If the Left has the courage to look at itself in the mirror, it will find the face of the public sector’s assassin.
Email: r_jagannathan@dnaindia.net