“THERE CAN ALWAYS BE SOME SPACE FOR THE PUBLIC SECTOR”
Even though the disinvestment process was on in India since the early days of economic liberalisation, the outright sale of public assets mostly happened during a brief period during Atal Bihari Vajpayee government’s time. In an interview with Business Today's Joe C. Mathew and Sumant Banerji, Arun
Shourie, who was the disinvestment minister under Vajpayee, talks about the rationale that drove disinvestment agenda in those days. Excerpts:
What was the principle behind disinvestment during your time in government?
The idea was that the role of the State should be reduced, and society should get greater latitude in doing things. In India, the society has been held back by the dead end of the State for long, due to the licence quota raj. So, as the licence quota raj got dismantled, the idea was that the monopoly of many large public sector enterprises, like the MMTCs, or the STCs, should end. Secondly, inefficient public enterprises were giving the more efficient private sector enterprises in those sectors unearned rents. For instance, if you have an inefficient public sector plant producing steel, you are giving a private sector company, which produces steel at low costs, an unearned rent. The third thing (which drove disinvestment) was that in many areas, because of the monopoly given to the public sector, the capacity which had been built up outside the public sector was not being fully utilised. The fourth was, of course, the cost to public exchequer. It was a big drain on the public exchequer.
As a matter of policy, should the government not be in the business of doing business at all?
That is not the criteria. There can always be some space for the public sector. The ISRO or Tata institute of Fundamental Research, in spite of being public enterprises, are doing wonderfully well. Also, in several sectors, it is good to have countervailing power. Take telecom for instance. Even though I was also the minister of state for telecom, it never crossed my mind that MTNL and BSNL should be privatised. One reason was that BSNL was so large, and nobody could have bid for it. But BSNL was also necessary to beat down other private operators, to lower their rates. So a countervailing power is good; but sometimes it doesn’t work. Air India has not worked, because of the culture of the organisation.