| Shourie: settling the intellectual arguments over | ||||||
The woman wags a hectoring finger at the minister. “If a child is unwell,” she says, “its mother does not give it an injection of poison.” She and a group of trade union colleagues are accusing the minister of doing just that by privatizing the aluminium plant in Chattisgarh state. For 40 minutes they sit in his office and plead with Arun Shourie, minister in charge of privatization, administrative reform and a panjandrum range of critical issues concerning modernization of India’s economy, to roll back the privatization of Bharat Aluminium (Balco).
Shourie refuses their entreaties and tries to reason with them. The government, he argues, has no alternative: privatization is good for the economy and good for the workers, especially since the new owners, Sterlite, run by a London-based overseas Indian, Anil Agarwal, have made promises that there will be no retrenchments or redundancies.
When the women have gone, a weary Shourie makes his case that privatization is here to stay and that the government is determined to press on with getting rid of its assorted albatrosses of loss-making industries, except in the three key areas of atomic energy, defence and railways.
“The intellectual arguments have been settled,” Shourie argues. “The government has no alternative but to privatize. Several times in the past year the issues have been debated in parliament for up to seven or eight hours a time. I have answered more than 400 questions. The procedures are completely transparent. The papers [on any deal] are handed over to the comptroller general.”
Shourie insists that the government has to rid itself of loss-making businesses and hand them over to competent managers. He reels off a string of gloomy figures: “If you take the tax revenues of the government of India, interest payment on past debt already eats up 70%; interest and principal payments together exceed the total tax revenues. That is at the central government level. In the states things are much worse.” In the ninth five-year plan, with total investments worth Rs3.5 trillion ($74.5 billion), the states were supposed to contribute a mere Rs38 billion. In fact, they drained Rs1.14 trillion, says Shourie.
At his direction, his ministry surveyed 210 enterprises run by the central government and discovered that half were making losses.
Shourie says: “If we took out government monopolies like petroleum, their combined rate of return was minus 4%. Given that the government borrows at 10% to 11%, that means losses of 15% on funding alone. In the states we looked at 946 of 1,020 enterprises and found that 241 of them were non-working, in other words, shut; 551 were running at big to enormous losses; and 100 had not submitted accounts for more than a decade.”
Reform within the government controlled set-up has been tried and has failed, he adds. “Countless committees have sat, managements have been changed and revival packages have been put together for 23 enterprises at a cost of Rs420 billion. Not one single enterprise has been turned round.” One reason is the widely prevailing view that, as the minister puts it: “the state is regarded as the private property of the person who at that moment happens to be in government.” Thus government-owned companies are excellent places to supply jobs for the offspring of the well connected who don’t want to exert themselves and compete in the modern economy.
An intellectual high-flier, Shourie worked at the World Bank in Washington from 1967 to 1978 before returning to India and establishing a reputation as a campaigning journalist who was prepared to challenge the excesses of then prime minister Indira Gandhi and her son Sanjay. He became editor of the Indian Express newspaper before turning to politics.
His bearing and dress proclaim him to be a modernizer who nevertheless understands and is in touch with the aspirations of the metropolitan middle classes who do not want India to be left behind economically. He is dressed simply in an air force blue shirt and dark slacks and he wears open sandals without socks. This dress, a sort of modern mass-market version of traditional home-spun, suggests a clean, efficient approach to problem-solving: a man who will get things done.
At the intellectual and technical level, Shourie may be convincing, but when it comes to the crunch of hard political reality, traditional India stands in his way. He insists that political clearance for privatization of 30 enterprises means that these will go ahead. Other companies are on the way to approval. But, coyly, he refuses to give progress reports or to pin his standard to the success of any one of the ventures, which include selling off majority stakes in Air India and Indian Airlines.
The minister admits that if India could achieve four of five success stories, the case for privatization would take a popular leap forward. He mentions that bread maker Modern Bread – which incongruously used to be a government enterprise – has doubled its sales and not a single employee has been fired since private enterprise took over.
Balco should have been a success story given the fact that the government had reached the end of the financial road, Shourie insists. “Neither the centre nor the state government had the resources to keep it in artificial respiration,” he says of the plant, which accounts for 12% of India’s aluminium production.
But the minister’s assertion that “we will wait it out and the workers will take care of it”, meaning that the desire for work will create the pressures for the factory to reopen, shows political naivety. Shourie admits that “the chief minister is the big issue”.
Indeed. Ajit Jogi, the chief minister of Chattisgarh, a state that was created last year by being carved out of part of Madhya Pradesh, has done more than cut off the power supply and refuse to let the new management into the plant. He is using the campaign against the privatized plant to build his political power base. He engineered a five-fold increase in the taxes on bauxite, the raw material for aluminium, in the recent state budget; he has delayed the processing of a bauxite mining lease and he has backed the employees’ actions against the privatization.
More important, Jogi has taken the case to the courts on a particularly sensitive issue – the rights of tribal peoples to land. He has invoked the fifth schedule to India’s constitution, under which no tribal land can be transferred to non-tribals. The claim is that the Balco factory, the bauxite mines and even the township are on land originally owned and protected by the fifth schedule. Chattisgarh has about a fifth of India’s tribal people.
The chief minister has carefully shored up his position with the Congress Party to which he belongs. In the 1980s, Congress, under Rajiv Gandhi and then Narasinha Rao with finance minister Manmohan Singh in the vanguard, launched the economic reforms intended to wake up India from its lethargy.
Now Congress is in opposition in New Delhi and has changed its tune. At its recent plenary session in Bangalore, Congress decided that the disinvestment programme started by Manmohan Singh was never meant to be a privatization plan.
Shourie sighs at the ability of politicians to set short-term advantage over principle – “the perversity of public life” as he calls it. He confesses that in some states the parties that formed the government in Delhi had taken positions against privatization where it suited their immediate advantage. His other reform work has also demonstrated to him the power of vested interests and the resilience of a bankrupt system.
He cites the case of a civil servant accused of pilfering that had been in the courts for 18 years and had still not been resolved. He also tells the tale of the file that meandered round the government system for more than two years dealing with the critical question of who was entitled to write on files in anything other than blue ink.
Shourie has yet to face the opposition on the big privatizations. Take Air India, for example: its sprawling inefficiency – it has 24 aircraft and 18,000 workers – stands in stark contrast to one of the companies bidding for a stake in the Indian carrier, Singapore Airlines, which has 88 aircraft and 8,000 employees.
A middle-ranking Air India manager says: “The airline is broke because it is used as a perk by government officials. Civil servants buy cheap economy tickets and then use their rank to insist on travelling first class. Even then, the airline may not see the money for the economy seat for many months because it gets delayed in the system. There are also too many ministries involved, who will fight for their rights to a slice of AI.”
It remains to be seen whether Shourie has the political punch to land a knock-out blow for privatization. The subject is one that has generated extraordinary emotion, with one former colleague accusing Shourie of deserting the Gandhian principles he once stood for. “Lickspittle” would be the nearest English equivalent of what he called Shourie, but in Hindi the expression is much more pejorative.
Shourie retains one advantage. He is perceived to wield influence with prime minister Atal Behari Vajpayee. “The notion that one is close to the PM is a rumour that one should never dispel,” he says – but even that comment seems to expose a certain weakness.
